The Financial Secretary has forecast a budget deficit of HKD 139.8 billion for the 2022-23 fiscal year, more than double its original estimate of HKD 56.3 billion. This is primarily due to less-than-expected land related revenue and stamp duty revenue. Despite the third deficit in four years, fiscal reserves of Hong Kong (SAR) remain strong, at an estimated HKD 817.3 billion as at 31 March 2023.
While Hong Kong’s fiscal reserves remain healthy, they have been reduced by approximately HKD 340 billion over the past three years mainly due to the economic downturn and various measures to support citizens and businesses during the pandemic. With the borders now reopen and most anti-pandemic measures removed, the Hong Kong (SAR) Government should take the lead to capture opportunities and prepare for the expected economic revival. Specifically, the government should provide measures to consolidate and further strengthen Hong Kong’s position as a top-tier international finance and business centre. It should provide more targeted incentives and policies to attract businesses and investors to be based in Hong Kong, to help drive sustainable economic growth. The government should also align the formulating and administering of tax policies to enhance Hong Kong’s overall tax competitiveness amid a continually evolving international tax environment.
We are pleased to see that the Government has adopted our proposal of issuing another round of electronic consumption vouchers to Hong Kong permanent residents and new arrivals, which will support citizens and businesses in the short term and stimulate local consumption.
In summary, this year’s Budget provides a range of immediate and short-term measures to support citizens and businesses to prepare for the economic turnaround. We are also pleased to see other new measures including a Capital Investment Entrant Scheme and a mechanism to attract overseas companies to re-domicile in Hong Kong. These measures will be crucial in improving Hong Kong’s competitiveness in the medium to long term and to help the city to maintain sustainable growth.
The information contained in the Hong Kong Budget Summary 2023-2024 is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
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