A cumulative budget deficit of $40.5 billion was recorded by the Government at the end of January. Spending from April last year to January this year amounted to $195.2 billion and revenue $154.7 billion, resulting in the shortfall. But it is expected the deficit will rise to $66 billion as predicted last week by Secretary for Treasury Denise Yue Chung-yee in a report that looked at whether Hong Kong is suffering a structural deficit. There was a surplus of $20.2 billion for January. A government spokesman said this was a result of the salary and profits taxes collected in the month. He also said the deficit for the year ending this month would probably be substantially larger than the deficit at the end of January. The main reason for this is that minimal revenue is expected from investment returns from the financial reserves for 2001 which were credited to government accounts last month. 'In the past, revenue from this source helped to reduce the deficit, if any, for that financial year,' he said. The reserves stood at $389.7 billion at the end of January.