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Contemplating the 2018-19 Budget

A gist of the blog:

For the first eight months of 2017-18 fiscal year (as at end November 2017), the cumulative year-to-date surplus amounted to $57.2 billion, higher than the full-year original estimate of surplus of $16.3 billion. It is estimated that the eventual surplus this year would be substantial. To make good use of the surplus is in no way an easy task. I consider that we should strive to strike a balance between investing in the future, increasing recurrent expenditure and launching short-term relief measures. It is important for us to invest and get prepared for the overall long-term needs of the society, and not just to win applause through one-off measures.

I note there are concerns that the increase of government’s recurrent expenditure would remain conservative, given that Article 107 of the Basic Law stipulates that the government should keep the expenditure within the limits of revenues in drawing up its budget, strive to achieve a fiscal balance, avoid deficits and keep the budget commensurate with the growth rate of its gross domestic product. I would like to reiterate that the implementation of this Article should not be a "straitjacket" which restrains our annual revenue and expenditure. Instead, there should be a certain degree of flexibility. What is most important is that we maintain an overall fiscal balance over time and avoid a structural deficit for the government.

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January 7, 2018