Hong Kong sees worrying deficit increase
Hong Kong’s budget deficit has surged to a record $7.2 billion for the first five months of the financial year, raising fears that plans to balance the books by 2006 might be derailed. The result prompted stern warnings by financial experts and academics that the government should tighten its belt further and re-examine whether new taxes were needed.
Figures showed expenditure of $12.7 billion from April to August, but revenue reached only $5.6 billion. The five-month deficit is the highest ever. The Basic Law (Hong Kong’s mini-constitution) includes an obligation for the government to keep expenditure within the limits of revenue in order to avoid budget deficits. Mr Leung forecast the budget would be balanced by 2006-2007 thanks to a wide range of measures, including cutting civil service pay by up to 4.42 percent and a plan to introduce a land-departure tax.
