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Mike Rowse

When he sits down later this month to finalise the budget for the coming financial year, Financial Secretary Paul Chan Mo-po will have some positive news in his pocket to balance against the many calls for additional spending. As some of those new demands are likely to be expensive and compelling, he will need all the help he can get.
First, the good news. Hong Kong is heading for a surplus in public finances. In his 2025 budget, Chan forecast a deficit on the consolidated operating account of HK$67 billion (US$8.6 billion).
In the first eight months of the financial year, the actual deficit on the consolidated operating account was only HK$18 billion. As the final four months are often when the bulk of tax revenues come in, we could be looking at a surplus of tens of billions of dollars on the operating account.
The better-than-expected results are attributed to the higher stamp duty revenues boosted by Hong Kong’s stellar performance as a fundraising centre, having reclaimed the top spot for money raised by way of initial public offerings. This must also have been a factor in the government’s recent announcement of an upgrade in forecast GDP growth, to 3.2 per cent from a range of 2–3 per cent.
The two big calls for additional spending will be the launch of the Northern Metropolis and recovery from the Tai Po fire disaster.
The government is already moving ahead aggressively with the implementation of the Northern Metropolis project. As this requires a much more activist approach to economic development than the city has practised before, one consequence will be a greater call on public funds to provide basic infrastructure and even co-invest with the technology companies it hopes to attract. Once we have helped establish the core of the project and generated some momentum, it should become self-sustaining. But in the early stages, the administration will have to play a major role.




Late last month, the government established Hung Shui Kiu Industry Park Company Limited as a wholly owned private company to drive development. A site of 23 hectares (56.8 acres) will be granted to the company at zero premium. There will also be a capital injection, the size of which will be announced in the budget, for construction, operating expenditure and co-investment in selected tenant companies.
As a general rule, financial secretaries do not like deficits or surpluses to be too large. The former have a negative effect on public and market confidence, the latter excite proposals from politicians – both within and outside the administration – for greater spending. Depending on how the numbers look when a final decision has to be made, I would not be surprised if the capital injection was a fairly hefty one.
The aftermath of the Tai Po fire could raise demands for public support in two respects: first, the capital cost of a practical solution on rehousing and second, restoring operating funding for a variety of worthy social purposes.
On the first point, I see the deaths of 161 people as a major blow to public confidence and a blot on Hong Kong’s international reputation. To repair the damage quickly, simplest is best. One remedy is to proceed with the demolition of Wang Fuk Court and its redevelopment in accordance with modern standards, including necessary safety features.

But if rebuilding on the site is not feasible, those who lost their homes could be offered accommodation in an alternative Home Ownership Scheme flat in a different location. Whatever the final decision, public funds will be required. The government has estimated that it would cost about HK$6 billion (US$770 million) to acquire all homes in the estate.
The second problem is less obvious but no less real. All corporations and individuals in practice have a limited budget for discretionary expenditure on matters such as promotional or charitable purposes. In 2025, there were two calls on such funds: support for the National Games and emergency help for the Tai Po victims.
The Hong Kong Jockey Club was the partner organisation for the Games and committed HK$450 million. The MTR Corporation and other local transport operators also gave support in cash or kind, as did a number of major corporations in the private sector. The total figure was not small.


The public outpouring of support for the Tai Po blaze victims has reached more than HK$4 billion. The combined effect of these two calls for donations has been to soak up much of the money that might otherwise have been available for smaller charities. Some of these could be struggling with fundraising as traditional supporters are tapped out. Some of the activities, if deemed worthy and urgent, might have to be rescued by an infusion of public funds.
One final comment on the budget. There are always good reasons to defer regular reviews of fees and charges for public services. There will always be complaints from the public or Legislative Council members, which will be picked up by the media.
But there is one very good reason to continue to apply the user-pays principle: it maintains Hong Kong’s reputation for prudent management of public finances, which is worth keeping. I urge Chan to hold the line. After all, a modest increase of 3–5 per cent from time to time is much easier for people to stomach than a big jump.


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Financial Secretary Paul Chan promotes the city’s coming shopping festival. The minister has said the consolidated account will continue to see a deficit because of spending on mega projects and the poor performance of land sales. Photo: Handout

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Financial Secretary Paul Chan delivers a speech on the city’s budget at the Legislative Council in Admiralty, on February 26. Photo: Sam Tsang

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Northern Metropolis ambitions and Tai Po fire recovery will test the city’s commitment to fiscal prudence


Northern Metropolis ambitions and Tai Po fire recovery will test the city’s commitment to fiscal prudence.


Hong Kong budget 2025-26

Hong Kong’s Tai Po fire tragedy

Northern Metropolis

Paul Chan

Hong Kong Jockey Club

Expresses the views, ideas and conclusions of the author. (Eg. Enough of Crazy Rich Asians, think of crazy poor Hongkongers.)


Why Hong Kong must resist pressure to loosen budget discipline

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Northern Metropolis ambitions and Tai Po fire recovery will test the city’s commitment to fiscal prudence

Northern Metropolis ambitions and Tai Po fire recovery will test the city’s commitment to fiscal prudence