HONG KONG, Feb 1 (Reuters) - 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 2012/2013.
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 2011.
"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 2011/12
-- Forecasts consolidated deficit of HK$3.4 billion for 2012/13
-- 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 ahead.
-- Government to take measures to support small to medium-sized companies.
-- 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 from 2010.
-- 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 resisted.
-- 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)