Hong Kong 2018-19 Budget Insights

Key budget assumptions, budgetary criteria and projections

  • Share

Assumptions used for the medium range forecast (MRF) for the period from 2018-19 to 2022-23

  • Real GDP growth rate for the forecast period is 3% to 4% for 2018 and the trend rate for 2019 to 2022 is 3%.
  • Investment return is estimated to be 4.6% in 2018 and in the range of 3.7% to 4.9% per annum thereafter.
  • Land premium is estimated to be 3.6% of GDP for 2019-20 onwards.
  • The fiscal reserves balance as at 31 March 2022, previously estimated at HK$942.9 billion is now revised to HK$1,202.7 billion, representing about 36.8% of GDP for that year. By 31 March 2023, the estimated fiscal reserves balance is estimated at HK$1,222.6 billion, representing 35.6% of GDP for that year.

Budgetary criteria

  • Budget surplus/deficit
    To sustain balance in the consolidated account in the longer term
  • Expenditure policy
    To commensurate public expenditure with the growth rate of the economy in the longer term
  • Fiscal reserves
    To maintain adequate reserves in the long run
Medium range forecast and fiscal reserves (in HK$ billion)
Year 2017-18
(Revised)
2018-19 2019-20 2020-21 2021-22 2022-23
Operating revenue 436.9 456.1 508.0 505.0 532.0 568.7
Operating expenditure (372.9) (441.5) (470.3) (498.0) (526.0) (557.1)
Operating surplus 64.0 14.6 37.7 7.0 6.0 11.6
Capital revenue 175.5 148.4 125.7 129.9 138.1 147.1
Capital expenditure (101.5) (116.4) (117.9) (121.9) (139.0) (138.7)
Repayment of bonds and notes - - (1.5) - - -
Capital surplus/(deficit) after repayment of bonds and notes 74 32 6.3 8.0 (0.9) 8.4
Consolidated surplus/(deficit) 138.0 46.6 44.0 15.0 5.1 20.0
Fiscal reserves as at 31 March 1,091.9 1,138.6 1,182.6 1,197.6 1,202.7 1,222.6

Source: Budget 2018-19