Hong Kong's multibillion-dollar budget deficit would be significantly reduced if major government assets and liabilities were taken into consideration under a different accounting method, an independent study has shown.
Amid growing concerns over how the government will tackle the deficit in the March 5 Budget, the Civic Exchange yesterday published what it described as a 'real' deficit figure when officials adopt the accrual-based accounting method later this year.
The operating deficit could be as low as $38 billion, according to the research co-funded by the South China Morning Post.
At present the budget only accounts for income and expenditure on a cash basis. The government has decided to produce a more comprehensive picture by presenting its assets and liabilities by the end of this year.
Hong Kong has been battling persistent budget deficits after expenditure has outstripped revenue in three of the five fiscal years since 1997.
With the deficit expected to top $70 billion next month, Chief Executive Tung Chee-hwa has warned that the public should be prepared to share the burden of higher taxes to restore a budget balance by 2006-07.