Hong Kong’s finance chief has unveiled a belt-tightening budget seeking to tap new sources of revenue and ease a HK$87.2 billion (US$11.2 billion) deficit, starting with a pay freeze for all public servants, a downsizing of the civil service by 10,000 positions and a cut in education spending.
Citing the benefits of the “one country, two systems” governing principle amid China’s rising prowess in technological innovation, Financial Secretary Paul Chan Mo-po on Wednesday also pledged to transform the city into an international exchange and cooperation hub for artificial intelligence (AI), making it a new key economic driver.
The government would spend HK$1 billion to establish the Hong Kong AI Research and Development Institute, among other technology-related initiatives worth billions, he said.
In a surprise move, Chan announced a pause in the sale of commercial land for a year, revealing the government might rezone some of the sites for residential use.
Delivering what analysts described as his “most challenging” budget yet, Chan devoted the bulk of his two-hour speech to ways to cut spending, opting for nips and tucks in several areas, and listing increases in fees and charges, including some relatively obscure ones, to raise revenue.
“Strictly containing public expenditure is a must, but we should proceed in a steady and prudent manner and be careful to find a balance among the various impacts that may arise in the process,” Chan said, vowing to minimise the effects of austerity measures on public services and people’s livelihoods.
