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Budget Speech

Public Finance

Financial Position of the Current‑term Government: Retrospect and Prospect

176. The current‑term Government has all along been adhering to the principles of exercising fiscal prudence, keeping expenditure within the limits of revenue and committing resources as and when justified and needed in public finance management.  We have also strived to enhance the transparency of public finance.  Thanks to years of economic development and the hard work of our people, the fiscal reserves stood at about $950 billion when this term of the Government took office, and subsequently reached a record high of $1.17 trillion in 2018‑19.  The ample fiscal reserves have enabled the Government to allocate additional resources in a prompt and decisive manner to defuse crises over the past two years, including setting up the AEF with an injection of about $200 billion in total and implementing counter‑cyclical measures on a massive scale to relieve people's hardship and stabilise the economy.  Though consolidated deficits were recorded from 2019‑20 to 2020‑21 as a result, the positive impact of the above initiatives, along with our solid foundation built on the principle of "One Country, Two Systems", have turned the consolidated deficit projected in the Original Estimates into a consolidated surplus projected in the Revised Estimates for this financial year.  Our fiscal reserves are estimated to stand at about $940 billion at the end of the current‑term of the Government, and will gradually rebound to over $1 trillion (equivalent to 16 months of government expenditure) during the five‑year period in the Medium Range Forecast (MRF).

177. On enhancing the transparency of public finance, I have brought back the Housing Reserve to the fiscal reserves since 2019‑20 and also announced last year that the investment return of the Future Fund would be progressively reflected in the Operating Account.  These measures will allow one to have a full grasp of the Government's fiscal strength and help maintain our financial stability.



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