A surplus of $2.9 billion for 2025/26 was announced in LegCo. on 26 February 2026 after some years of deficits. This surplus of $2.9 billion was arrived at by the adjustment of bond issues and redemption in 2025/26. With the surplus of $2.9 billion in hand, the government will spend more of $22 billion (including $5.3 billion in tax reduction, $3.5 billion rates rebate and $6.5 billion for social subsidies, and other expenditure) in the coming year 2026/27. Apparently, the HKSAR government will rely on bond issues to pay for government spending in the years ahead, and in particular, for the Northern Metropolis Development in the coming decades.

The webinar will address the following 7 questions: -

First, how is the surplus of $2.9 billion for 2025/26 arrived at?

Secondly, why does it appear to be the direction or intention of the HKSAR government of issuing bonds to pay for government spending? USA government prints money to pay for government spending. HKSAR government cannot print money. Since 1990s, some American scholars advocate, with economic theory, which however is debatable, using printed money (not bond issues) to pay for government spending. Yet, printing money is distinct from issuing bonds, as evidenced by USA history.  It was the Federal Reserve's intent to print money since 1913 for purposes other than paying for government spending. Then, the USA government’s shifts towards issuing bonds to pay for government spending since the 1990s. The 2 concepts emerged at different times in USA history and for two different purposes. Additionally, money is printed by the Federal Reserve, whereas US Treasury Securities or US government bonds are issued by the US federal government. Federal Reserve is different from the USA federal government. Notably, Donald Trump president of the USA has encountered challenges in removing the Federal Reserve's chairman. Back to Hong Kong, can the HKSAR government print money without corresponding financial assets? The US Federal Reserve can print money.  Then, is it appropriate to rely on issuing bonds to pay for government spending, considering that in Hong Kong, Article 107 of the Basic Law restricts government spending to revenue received?

Thirdly, why is the bond issues/GDP ratio a suitable base to support issuing bonds to pay for HKSAR government spending? Receipts from bond issues are hard cash received while GDP is not cash received but a measurement of economic performance of a territory. Then, what is the significance of the ratio between bond issues and GDP?  

Fourthly, from which date has the HKSAR government relied on borrowing money to pay for government spending?  This date must be after 31 Marh 2019. The HKSAR’s reserve hit the highest level on 31 March 2019 with reserve over $1,100 billion, with no significant bond issues. Therefore, up to 31 March 2019, the HKSAR government did not rely on borrowing to pay for public spending. What was the exact data of the new direction or intention of bond issues to pay for government spending?

Fifthly, how serious are the HKSAR government deficits? The HKSAR government needs revenue to pay for, amongst other things, the growing spending for the elderlies, the medical, social and education expenditure and the Northern Metropolis Development. Should the HKSAR government observe Article 107 of the Basic Law, in light of the recent Blueprint for the future: China’s 15^th Five Year Plan passed on 12 March 2026? The HKSAR government should improve governance according to the law.

Sixthly, can the HKSAR government reduce deficits through fiscal measures (revenue increase and expenditure reduction) and strategic changes in public administration? While there is a will, there is a way.

Seventhly, what is the triangle of happiness, public finance and public administration? Hong Kong ranks 86 out of 143 territories in the United Nations World Happiness Report 2024.

Mr. Godwin Ng

Mr. Godwin Ng has 20 years of experience as a Barrister-at-Law in practice, specializing in tax and civil matters and 40 years as a Certified Public Accountant (CPA). His extensive tax experience includes tax litigation in court and delivering tax seminars on offshore income, capital gains, cross-border transactions and tax investigations.  Over the years, he has actively contributed to budget recommendations through his participation in various professional associations. In service to the community, Mr. Ng held the position of Vice President at the Taxation Institute of Hong Kong previously. He holds an LLB from the University of London, a PCLL from the University of Hong Kong, and an MBA (Financial Services) awarded jointly by the Universities of Wales and Manchester.