2011-02-23 16:25

HONG KONG - Hong Kong expects a budget surplus of HK$3.9 billion ($500.5 million) in 2011-2012 fiscal year, equivalent to 0.2 percent of the city's GDP, financial chief John Tsang said on Wednesday in his budget speech.

Hong Kong expects total revenue for 2011-2012 to reach HK$375 billion, while the overall expenditure for the noted period is estimated to reach HK$371.1 billion, an increase of HK$67.6 billion over 2010-2011, Tsang said.

Operating expenditure for 2011-2012 is estimated to be HK$298 billion, including recurrent expenditure of more than HK$242 billion. Of the recurrent expenditure, 56.4 percent will be used in the three policy area groups of education, health and social welfare, according to the speech.

For the medium term, Tsang forecasts an annual surplus in the operating account for the period between 2012-2013 and 2015-2016. With a number of major infrastructure projects entering their construction peaks, a deficit will arise in the capital account, but a surplus is expected in the consolidated account, he said.

Tsang expects Hong Kong's fiscal reserves to have increased to HK$591.6 billion by March 31, 2011, with the number expected to reach HK$595.5 billion by March 31, 2012 and HK$697.7 billion by March 31, 2016.

"Maintaining adequate fiscal reserves does not mean that we are reluctant to increase expenditure," Tsang said. The revised estimate of government expenditure for 2010-2011 reached over HK$300 billion, an increase of over 29 percent compared with 2007-2008, according to the speech.

Tsang noted in the revised estimates for 2010-2011 that Hong Kong expects to record a surplus of HK$71.3 billion last year. The revised estimate for total revenue is HK$374.8 billion , HK$82.8 billion higher than the original estimate.

Government expenditure for 2010-2011 is HK$303.5 billion, HK$13.7 billion less than the original estimate.