HONG KONG, Feb 24 (Reuters) - The following are highlights of Hong Kong’s budget for the 2016/17 fiscal year starting in April, presented by Financial Secretary John Tsang.
BUDGET * Forecasts 2015/16 provisional budget surplus of HK$30 bln (govt forecast HK$36.8 bln) * Forecasts 2016/17 consolidated budget surplus of HK$11 bln * Expects deficit in consolidated account in 2018/19 and 2019/20 mainly due to allocations for healthcare reform and retirement * Fiscal reserves estimated around HK$870 bln by end-March 2017
* Reduce salaries tax and tax under personal assessment for 2015-16 by 75 pct, subject to a ceiling of HK$20,000. To benefit 1.96 mln taxpayers and cut govt revenue by HK$17 bln * Waive rates for 4 qtrs of 2016-17, subject to ceiling of HK$1,000 per qtr for each rateable property; will benefit 3.17 mln properties and reduce govt revenue by HK$11 bln ECONOMY * Q4 GDP up 1.9 pct y/y * Q4 GDP expands 0.2 pct q/q * 2015 GDP up 2.4 pct vs govt forecast of 2.4 pct * Govt forecast 2016 GDP growth of 1-2 percent * 2016 headline inflation expected at 2.3 pct * Underlying 2016 inflation forecast at 2 pct * Expects fiscal reserves at HK$860 bln by end-March 2016 * Expects 3 pct avg GDP per annum in real terms from 2017-20 * “The local economy is laden with risks in the year ahead; the outlook is far from promising. We need to take timely and appropriate measures to stimulate the economy, support local enterprises and safeguard employment.”
POLITICS * “Acute social conflicts will add uncertainties to the already adverse economic environment. Politics and economics are closely intertwined. Political volatility will unavoidably impact on our economy.” * Expects political disputes will “intensify” in coming months * “Tension and turbulence are mounting in Hong Kong. Many of us feel suffocated by and, indeed, helpless with the tiresome confrontations day in and day out. This highly charged atmosphere has continued to deteriorate since the unlawful occupy movement a year and a half ago, even after the defeat of the constitutional reform package. Confrontations have not eased, and worse still, our society has become even more polarised.”
INVESTMENT * Set up HK$2 bln Innovation and Technology Venture Fund to co-invest with private venture capital funds in local start-ups * To explore ways to open up more channels for two-way cross-boundary RMB fund flows, including bigger investment quota for Hong Kong under RQFII scheme * Will implement Shenzhen-Hong Kong Stock Connect “as soon as possible” * To launch HK$10 bln inflation-linked bond
HOUSING * Govt has adopted public housing supply target of 280,000 units from 2016-17 to 2025-26 * Expects to sell land for 29,000 private sector flats in 2016/17
HEALTHCARE, EDUCATION, SOCIAL WELFARE * Estimated recurrent expenditure for 2016-17 is HK$198 bln, accounting for 60 pct of recurrent govt expenditure - an increase of more than 80 pct from 10 years ago
Reporting by Donny Kwok, Twinnie Siu, Farah Master, Clare Baldwin, James Pomfret; Editing by Jacqueline Wong
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