While Hong Kong's Financial Secretary, Paul Chan, announced that the country would not achieve a balanced current account until 2028/29, Singapore had already quietly completed its third-generation economic transformation. The fiscal policy choices of these two once-collar Asian financial centers in the post-pandemic era are widening the gap in competitiveness to an unprecedented level.
Hong Kong's fiscal predicament is undeniable: fiscal reserves are projected to halve from a high of HK$1.16 trillion in 2019 to HK$580 billion in 2025/26, equivalent to just eight months of government spending. This represents a significant decrease from the 28 months when Paul Chan took office, and marks a new post-handover low. Even more alarming is that, excluding fiscal maneuvers such as bond issuance and fund withdrawals, the actual fiscal deficit in 2024/25 will reach HK$280 billion, equivalent to more than half of total government revenue.
