Weekly Buzz: 💰 Highlights from Hong Kong's Budget 2025

With six years of budget deficits in mind, Hong Kong’s Financial Secretary, Paul Chan,  has unveiled the latest Budget Report which focuses on boosting income, cutting costs, and investing in the future.

The plan outlines a range of economic and financial policies designed to stabilise the city’s finances while investing in industry innovation and cross-border connections. Here’s what you need to know:

Managing budgets in a not-so-hot economic comeback

Last year, Hong Kong's government grappled with a considerable deficit of HKD 87.2 billion, causing fiscal reserves to dip to HKD 647.3 billion – the lowest since the handover. While this year's budget deficit is expected to ease to HKD 67 billion, reserves might still slip below HKD 600 billion.

To address this, the government is launching the "Enhanced Fiscal Consolidation Plan" to get things back on track:

Cutting out sugar for a healthier future

The Hong Kong government is also cutting back on one-time relief efforts. It halves the caps on salary tax and rate reductions, to HKD 1,500 and HKD 500 respectively, but keeps the extra half-month subsidy for social security and old age allowances. Meanwhile, the HKD 2,500 student subsidy is being scrapped, with focus shifting to long-term investments in education and tech. 

This includes a HKD 1 billion plan to launch the "Hong Kong Institute for AI Research" to drive AI industry growth. Plus, Cyberport's supercomputing power will get a boost to speed up research on large language models. Financial Secretary Paul Chan highlighted that all these changes aim to balance financial sustainability with community needs.

Financial and industrial upgrades 

Hong Kong is putting its energy into long-term financial reforms, focusing on the capital markets, virtual assets, and innovation and technology.

The goal is to strengthen the city's financial market and draw in more international investors and capital. In the short term, the government is keen on growing the tech and green economy, investing in areas like artificial intelligence, green finance, and cross-border finance – efforts which should enhance the city’s economic competitiveness on the global stage.

What’s the takeaway here?

Despite rising debt levels and the "sugar-reduction" measures in the fiscal budget raising concerns about Hong Kong's prospects,, Hong Kong's debt-to-GDP ratio remains relatively low, between 12% and 16.5%, which is much lower than Singapore's 171% and the U.S.'s over 100%. To support the budget, the Hong Kong government plans to expand bond issuance to HKD 700 billion, with a mid-term target of HKD 1,015 billion. Coupled with investments in cross-border finance and industry upgrades, these measures are poised to positively impact Hong Kong's economic future.

As an investor, it's wise to keep tabs on policy shifts and global interest rate trends. By seizing these opportunities and choosing the right tools—like a diversified portfolio such as our General Investing — you can still generate extra cash flow, even when times are tight, helping you reach your long-term financial goals.