Press Release - March 16, 2005

The Financial Secretary, Mr Henry Tang, of the Hong Kong Special Administrative Region Government, has today (March 16) in his annual Budget laid foundations to consolidate the current economic recovery through active promotion of social stability and economic development.

Mr Tang also revealed that the government was well on the way to balancing its books.

Delivering his second Budget, Mr Tang said Hong Kong�s economy grew by 8.1% in real terms in 2004, the highest growth in four years and well above the 20-year average of 4.8%.

He forecast real GDP growth of 4.5% to 5.5% in 2005, with CPI inflation expected to be 1.5%.

He said a fiscal surplus of C$1.85 billion (HK$12 billion) would be achieved in 2004-05. But after discounting the proceeds from bond issuances, there would still be a deficit of C$2 billion (HK$13.4 billion).

The surplus was due to lower expenditure and higher revenue, with land premiums in particular contributing C$4.8 billion (HK$31.3 billion) to government coffers � more than two and a half times the original estimate.

Mr Tang also revealed that operating expenditure for 2004-05 would be lower than the previous year�s � down to C$31 billion (HK$201.2 billion). Barring two special accounting arrangements with the former municipal councils, this is the first time in over 50 years that operating expenditure has fallen.

�We have succeeded in checking the trend of our operating expenditure,� he said. �This clearly demonstrates that we have the determination and capability to contain our spending.�

Expenditure for 2005-06 will be C$38 billion (HK$247.8 billion), with over 60% spent on education, social welfare, health and security.

He said the Government would uphold the principle of �market leads, government facilitates� and actively promote economic growth by facilitating the development of the market and providing a favourable platform for the business community.

This would be achieved by encouraging fair competition, fostering economic co-operation with the Mainland, assisting Hong Kong enterprises to access the Mainland market, enhancing the competitiveness of the financial, logistics and tourism industries, improving training and attracting more talent.

�Boosting the economy will also provide us with more opportunities to realize our potential and upgrade our standard of living,� he said.


For more information, please contact: Stephen Siu, Assistant Director (Public Relations) of the Hong Kong Economic and Trade Office at: (416)924-5544 or email: [email protected] or Elison Chu, Senior Information Officer, [email protected]