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Hong Kong economy
Opinion
SCMP Editorial
SCMP Editorial

Editorial | Clearer skies allow Hong Kong budget to go beyond balancing the books

Modest growth and easing deficits enable a more focused approach to addressing the broad range of pressing issues facing the people of Hong Kong

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Financial Secretary Paul Chan speaks during a ceremony marking the first trading day of the Year of the Horse at the Hong Kong Exchanges and Clearing Limited on February 20. Photo: AP
SCMP Editorial
With the Hong Kong government budget coming shortly after Lunar New Year this year, Financial Secretary Paul Chan Mo-po needs no reminder that people’s hopes – as numerous as the wishes hanging on the Lam Tsuen Wishing Tree – are riding on his annual plan. Equally important is the goal to help Hong Kong weather challenges and achieve robust growth in the Year of the Horse. How to capitalise on the opportunities ahead and enable more people to enjoy the fruits of economic success is the test before him.
Modest economic growth and an easing budget deficit have given the veteran finance chief more room to manoeuvre. This enables him to go beyond balancing the books to properly address the immediate needs of the public while investing in the future in accordance with the priorities set by the country and the city. Chan must work harder to seize the momentum arising from Hong Kong’s integration within the Greater Bay Area and with the mainland.

Sharing a photograph of the budget booklet on his blog on Sunday, Chan said the purple colour signified the city’s growing economic momentum amid a fast-changing external environment. Chan earlier said he was cautiously optimistic for the year ahead, noting that the external environment remained volatile and challenging. The intensifying geopolitical tension and economic headwinds leave no room for Hong Kong to lower its guard. The government should stay vigilant as the city’s open economy remains susceptible to regional and global political and economic shock waves.

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Although there will be fewer fiscal constraints as budget balance is gradually restored, the pressure to minimise spending and raise revenue will only grow under the city’s ambitious development plans, including the Northern Metropolis project. More vigorous efforts are needed to enhance government efficiency and productivity.

The budget could take a more focused approach to addressing the pressing issues facing the city, ranging from the need for better care for the disadvantaged to more targeted relief measures for the middle class. It also offers a chance to prioritise strategic development, including investing in innovation, artificial intelligence and other key industries while exploring new growth engines.

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What sets this budget further apart is the need to prepare for the new national five-year plan. For the first time, the local government is to produce its own five-year blueprint that aligns with the state’s development goals and strategies. Chan is expected to shed more light on the way forward. It would be good if the government could come up with some short- and long-term measures that enable Hong Kong to maximise its institutional strengths and foster development that benefits the city and the country.
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