| HONG KONG
HONG KONG Feb 26 Hong Kong will likely post a
far leaner budget surplus this year as the financial hub known
for its amped up capitalism debates the sustainability of its
longer-term finances amid calls to boost welfare spending and
narrow the wealth gap.
Financial Secretary John Tsang is expected to unveil a
fiscal surplus of HK$10-20 billion ($25.8 billion) for the
financial year 2013/14, far less than the bumper HK$64.8 billion
last year, in his budget speech that starts at 0300 GMT, a straw
poll of economists and accounting firms showed.
"It's likely to be significantly lower than what we've had
in the past few years," said Paul Tang, an economist with Bank
of East Asia in Hong Kong, of the budget surplus.
The government previously said it was expecting a mild
deficit of HK$4.9 billion.
Economic growth is expected to be steady, according to a
Reuters poll of analysts, who forecast Hong Kong's GDP to grow
3.5 percent this year versus an expected 3.0 percent last year,
given signs of an improving global economy.
Hong Kong's fortunes are closely tied to the mainland where
growth is slowing. Efforts by the Chinese government to boost
Shanghai as a financial centre may also pose a drag on the city
which has the largest pie of the lucrative offshore yuan
business and wants to retain it.
NO BUMPER GIVEAWAYS SEEN
While Hong Kong's government has handed out billions,
including tax concessions and cash handouts in previous years,
another bumper "giveaway" budget isn't expected this time round.
Experts see the government giving away less to middle class
families and instead focusing more on the city's poor.
While still one of Asia's richest cities flush with
billionaires and gleaming skyscrapers with fiscal reserves of
over HK$765.3 billion ($90.21 billion), Hong Kong has struggled
in past decades to contain a yawning wealth gap that has seen
around 1.3 million of its 7 million population pushed below the
poverty line, according to a government-commissioned report.
Last month, Hong Kong's leader Leung Chun-ying announced a
multi-billion dollar raft of poverty alleviation measures
including a low-income working family allowance, which while
lauded as long overdue, also raised concerns the city's reserves
might be run down by the new recurrent expenditure.
Soon after Leung's policy address, financial secretary Tsang
warned of the need for fiscal prudence and of the risk of
surpluses slipping to deficits, in what some saw as a split in
views over the direction of Hong Kong's public expenditure.
"The government should plan ahead to address the deep-rooted
widening wealth gap and aging population issues, and strive for
a balance when addressing the specific needs of the community,"
said Marcellus Wong, a senior advisor with PwC.
Analysts do not expect the government to loosen a raft of
property cooling measures that have begun to show signs of
moderating the once red-hot market even as a bulk of Hong Kong's
revenue comes from the key real estate sector.
Home prices have more than doubled since 2008 in one of the
world's most expensive property markets, putting a strain on
business costs and worsening income gaps.
(Additional reporting by Grace Li; Editing by Jacqueline Wong)