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HIGHLIGHTS-Hong Kong budget for fiscal 2014/15
February 26, 2014 / 4:01 AM / in 4 years

HIGHLIGHTS-Hong Kong budget for fiscal 2014/15

(Add budget forecasts, land sales target, relief measures)

HONG KONG, Feb 26 (Reuters) - The following are highlights of Hong Kong’s budget for the 2014/15 fiscal year starting in April.

Hong Kong, which has handed out billions, including tax concessions and cash handouts in previous years, debates the sustainability of its longer-term finances amid calls to boost welfare spending and narrow the wealth gap.

While still one of Asia’s richest cities flush with billionaires and gleaming skyscrapers, 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.

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. But the government’s property cooling measures have begun to show signs of moderating the once red-hot market.

Hong Kong’s fortunes are closely tied to the mainland where growth is slowing. China’s effort to boost Shanghai as a financial centre may pose a drag on the city which has the largest pie of the offshore yuan business.

The budget is being presented on Wednesday by Financial Secretary John Tsang.


* Forecasts 2013/14 provisional consolidated surplus of HK$12 billion.

* Forecasts fiscal reserve at HK$745.9 billion by end-March 2014

* Forecasts 2014/15 consolidated surplus of HK$9.1 billion.

* Says fiscal reserves estimated at about HK$755 billion by end March 2015

* Fiscal reserves are estimated at about HK$799.2 billion by end-March 2019, representing about 29.1 per cent of GDP and equivalent to 19 months of government expenditure.


* 2013 GDP up 2.9 pct year-on-year

* Forecasts 2014 GDP growth 3-4 percent

* Expects 2014 headline inflation at 4.6 percent

* Forecasts 2014 underlying inflation at 3.7 percent

* 2013 Q4 GDP up 3 percent year-on-year vs Reuters poll 3.0 percent

* 2103 Q4 GDP up 1.1 percent quarter-on-quarter

* For the medium term, the annual average growth rate is forecast to be 3.5 percent in real terms from 2015 to 2018, and the underlying inflation rate will average 3.5 percent.


* Says must continue with its demand-side cooling measures to avoid risk of property bubble.

* To sell 34 residential sites in 2014/15, to provide 15,500 units.

* To increase housing land supply with a view to achieving the target of providing 470,000 residential flats in the next 10 years.

* About 71,000 private residential units are estimated to be available for sale in the next three to four years.


* Proposes to waive stamp duty for trading of all exchange traded funds


* Proposes to issue inflation-linked bond worth up to HK$10 billion with maturity of three years


* Assisting the Airport Authority Hong Kong to press ahead with planning for a three-runway system. The project, estimated to cost over HK$100 billion ($12.9 billion), will foster long-term economic development and enhance our competitiveness.

* Projects under construction include the Tuen Mun-Chek Lap Kok Link, Central-Wan Chai Bypass and Island Eastern Corridor Link, and widening of Tolo Highway and Fanling Highway. They are on track for completion successively before the end of 2018.

* As for railways, the West Island Line, the South Island Line (East), the Kwun Tong Line Extension and the Shatin to Central Link, at a total cost of more than HK$110 billion ($14.2 billion), are all under construction. They are expected to be completed for commissioning between the end of this year and 2020.

* As for the management of municipal solid waste, the government will invest about HK$30 billion in waste recycling and treatment facilities.


* Recurrent expenditure on education for 2014-15 will be HK$67.1 billion, an increase of nearly 80 percent over 1997-98.


* Recurrent expenditure on elderly services has increased more than 40 percent to HK$5.4 billion over the past five years. From 2014-15, the annual expenditure in this area will increase by more than HK$660 million.


* Says to reduce salaries tax and tax under personal assessment for 2013-14 by 75 percent, subject to a ceiling of HK$10,000. The proposal will benefit 1.74 million taxpayers in the territory but will cost the government about $9.2 billion.

* Says to reduce profits tax for 2013-14 by 75 percent, subject to a ceiling of HK$10,000. This proposal will benefit 126,000 taxpayers in the territory but costs government HK$1 billion.

* To waive rates for the first two quarters of 2014-15, subject to a ceiling of HK$1,500 per quarter for each rateable property.

* Says to pay one month’s rent for public housing tenants.

* To increase the allowances for maintaining dependent parents or grandparents.

Reporting by Donny Kwok; Editing by Jacqueline Wong

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