Budget Back in Balance

The Financial Secretary’s budget met with overwhelming approval, registering the lowest objection rate to any of Mr. Henry Tang’s three budget proposals since he took office, with just four votes against. 

Highlights of the 2006-07 Budget included Mr. Tang’s declaration that the Government would restore fiscal balance in both its Operating and Consolidated Accounts for the first time in eight years – and three years ahead of schedule. 

The anticipated HK$5.8 billion operating surplus and HK$4.1 billion consolidated surplus for 2005-06, was, said Mr. Tang, attributed to strong performance in 2005 coupled with Government’s efforts to rein in expenditure.

Hong Kong is ahead of schedule in meeting two other fiscal targets, with operating expenditure continuing to drop for the second consecutive year in 2005-06 and being contained below HK$200 billion, and public expenditure dropping to and remaining below 20% of GDP starting from 2004-05. 

The Financial Secretary forecast a consolidated surplus of HK$5.6 billion for 2006-07, rising to HK$32.6 billion in 2010-11. At the same time, he pledged to continue to manage public finances prudently and keep expenditure within revenue limits.

Revealed the strong economic performance that underscored the strength of the recovery, Mr. Tang listed the creation of 240,000 new jobs over the past two years, record high employment of 3.43 million, unemployment at a four-year low of 5.2% and a decrease of 36,000 in the number of long-term unemployed.

"Our domestic economy has been moving forward with increased momentum, and we are better placed to ward off external shocks," said Mr Tang. He said the Government should be vigilant to challenges ahead which would impact on public finances, including the potential risks of an avian influenza epidemic, volatility in the global financial markets, an ageing population and environmental problems. 

To help sustain the recovery, Mr Tang said the Government would continue its unique economic co-operation with the Mainland through effective implementation of the Closer Economic Partnership Arrangement with the Mainland and the Pan-Pearl River Delta Regional Co-operation Framework Agreement. The Government would also focus on reinforcing Hong Kong's competitive advantages in its business environment, financial services, tourism and logistics; and on nurturing and attracting the best talent.

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