Hong Kong 2013-14 Budget Insights

Key budget assumptions, budgetary criteria and projections

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Assumptions used for the medium range forecast (MRF) for the period from 2013-14 to 2017-18

  • Real GDP growth rate for the forecast period is 1.5% to 3.5% for 2013 and the trend rate for 2014 to 2017 is 4%.
  • Investment return estimated to be 5% in 2013 and in the range of 3.7% to 6.2% per annum thereafter.
  • Land premium estimated to be 2% of GDP for 2014-15 onwards.
  • The fiscal reserves balance as at 31 March 2017 previously estimated at HK$670.4 billion is now revised to HK$790.9 billion, representing about 30.9% of GDP for that year. By 31 March 2018, the estimated fiscal reserves balance is estimated at HK$850.3 billion, representing 31.3% of GDP for that year.

Budgetary criteria

  • Budget surplus / deficit
    To sustain balance in the consolidated and operating accounts. In the longer term, to achieve an operating surplus to partially finance capital expenditure.
  • Expenditure policy
    To keep public expenditure at or below 20% of GDP.
  • Fiscal reserves
    To maintain adequate reserves in the long run.
Medium range forecast and fiscal reserves (in HK$ billion)
Year  2012-13
(Revised)
2013-14 2014-15 2015-16 2016-17 2017-18
Operating revenue  347.9 349.5 392.9 431.6 449.1 476.1
Operating expenditure  (304.8) (352.0) (321.1) (390.4) (360.8) (382.4)
Operating surplus/ (deficit)  43.1 (2.5) 71.8 41.2 88.3 93.7
Capital revenue  97.6 85.6 55.2 61.3 61 65.4
Capital expenditure   (75.8) (88.0) (103.3) (101.1) (102.8) (99.7)
Repayment of bonds and notes   (9.8)
Capital surplus / (deficit) after repayment of bonds and notes  21.8 (2.4) (57.9) (39.8) (41.8) (34.3)
Consolidated surplus / (deficit)  64.9 (4.9) 13.9 1.4 46.5 59.4
Fiscal reserves as at 31 March  734.0 729.1 743.0 744.4 790.9 850.3

Source: Budget 2013-14