HONG KONG, Feb 1 Hong Kong on Wednesday
posted a provisional budget surplus of HK$66.7 billion for the
2011/2012 fiscal year ending in March, significantly higher than
its forecast surplus of HK$3.9 billion.
Analysts said revenue from land sales and property
transactions, thanks to a frothy real estate market, helped
swell the city's finances. For 2010/2011, Hong Kong reported a
surplus of $71.3 billion, the second highest on record.
Hong Kong unveiled a budget aimed at appeasing disgruntled
lower-income groups with the announcement of a personal income
tax rebate of up to 75 percent for the 2011/2012 fiscal year.
In his last annual budget speech to the legislature on
Wednesday, Financial Secretary John Tsang said the government
would increase land supply and waive property rates for fiscal
He said Hong Kong's economy was expected to expand 1-3
percent in 2012 after growing 5 percent in 2011. Hong Kong's
economy grew 3 percent year on year in the fourth quarter of
"Economic growth slowed from 5.3 per cent in the second
quarter to 4.3 per cent in the third quarter and further to 3
per cent in the fourth," he said.
The government said it was not optimistic about the outlook
for Hong Kong's exports in the first half of this year, and
forecast inflation at 4 percent and headline inflation at 3.5
percent in 2012.
Following are other highlights from Tsang's address.
MAJOR ECONOMIC DATA AND MEASURES
-- Provisional consolidated surplus at HK$66.7 billion for
-- Forecasts consolidated deficit of HK$3.4 billion for
-- Revised estimate for government revenue for 2011-12 is
HK$433.1 billion, including HK$83.1 billion land revenue,
government expenditure will be HK$366.4 billion
-- Government forecasts total revenue at HK$390.3 billion
for 2012-2013, including an estimate HK$60 billion land revenue,
government expenditure to reach HK$393.7 billion.
-- A table of government estimates and provisional figures
for revenue and expenditure:
Fiscal Year 2012/13 2011/12
Revenue HK$390.3 bln HK$433.1 bln
- land revenue HK$60 bln HK$83.1 bln
Expenditure HK$393.7 bln HK$366.4 bln
Balance HK$3.4 bln (deficit) HK$66.7 bln (surplus)
-- Fourth-quarter 2011 GDP up 3 percent, year on year.
-- Inflation forecast at 4 percent in 2012, headline
inflation at 3.5 percent.
-- GDP up 5 percent in 2011, GDP forecast to expand 1-3
percent in 2012.
-- Says to introduce measures worth nearly HK$80 billion in
this year's budget to better prepare people for difficult times
-- Government to take measures to support small to
-- To provide corporate income tax rebate of 75 percent for
2011/12, with ceiling of HK$12,000.
-- To waive property rates for 2012/13.
-- To provide personal rebate income tax rebate of up to 75
percent for 2011/12, with ceiling at HK$12,000.
-- To increase personal tax allowances.
-- To raise the basic allowance and single-parent allowance
from HK$108,000 to HK$120,000, to increase the married person's
allowance from HK$216,000 to HK$240,000.
-- To increase land supply to ensure supply is not affected
by economic cycles or fluctuations of the property market.
-- In this financial year, the number of residential sites
sold and to be sold by the government, including those in the
land sale programme for the fourth quarter already announced,
amounts to 27, providing about 7,900 flats in total.
-- To provide land for construction of 30,000 private
residential units in 2012/13.
-- To issue up to HK$10 billion inflation bond with maturity
of three years.
-- Yuan deposits in Hong Kong amounted to nearly 590 billion
yuan as at the end of 2011, an increase of nearly 90 percent
-- Hong Kong's leader said in November that economic growth
could shrink to as little as 2 percent in 2012 from 5 percent
forecast for 2011. A Reuters poll of 23 analysts conducted in
January forecast economic growth at 3 percent in 2012.
-- The Hong Kong dollar has been pegged at HK$7.80 to the
U.S. dollar since 1983, providing the government with little
flexibility to control monetary policy to cool growth and ease
gains in asset prices. This has prompted calls for the local
currency to be de-pegged, which the government has so far
-- The government aims to moderate property prices by
boosting land supply and through cooling measures that have just
begun to ameliorate massive price increases since 2009. The
gains have been fuelled in part by cheap mortgages, huge capital
inflows and a flood of mainland Chinese investors. Hong Kong
property prices, now among the world's most expensive, have
eased about 4 percent since mid-2011, while property deals in
2011 fell 33 percent.
-- In a city that suffers one of the highest income gaps in
the developed world, Hong Kong Chief Executive Donald Tsang's
approach has been to offer concessions to a population facing
stagnant wages and sky-high property prices, although some say
short-term relief is not a cure-all.
(Reporting by Donny Kwok; Editing by Chris Lewis)