The Financial Secretary warned last night that Hong Kong should learn a lesson from the economic crisis unfolding in Argentina and take decisive measures to reverse the trend of chronic budget deficits.
Antony Leung Kam-chung said the alarm bells had already started ringing with the SAR's predicted $60 billion shortfall for this financial year.
'We must realise public financial resources are not unlimited. We cannot ignore the problem, thus resulting in a situation that is irreparable,' he said.
Mr Leung highlighted the problem of shrinking revenue and 'rigidity' in the reduction of government expenditure in areas such as civil service pay and welfare subsidies.
He said drawing from the financial reserves was not a long-term solution. Neither would the issuing of bonds generate genuine revenue.
Speaking at a dinner hosted by the Chinese Manufacturers Association, he said Hong Kong must not keep everything unchanged and maintain its past lifestyle. Its financial situation would nose dive if decisive measures were not taken to reverse the long-term trend of spending exceeding revenue.