Medium Range Forecast
281. The MRF projects the revenue and expenditure as well as fiscal position of the Government from a macro perspective. It has fully reflected the impact of the measures in the fiscal consolidation programme. From 2026‑27 to 2030‑31, a real economic growth rate of three per cent is adopted.
282. During the above period, the average annual capital works expenditure will be about $120 billion, while recurrent government expenditure will grow at a rate of 3.6 per cent per annum. The ratio of total government expenditure to GDP will gradually fall from about 24.2 per cent for 2026‑27 to about 21.5 per cent for 2030‑31.
283. As regards revenue, the growth rates of revenue from profits tax, salaries tax and stamp duties are expected to correspond to the economic growth rates in the next few years. For 2027‑28 onwards, revenue from land premium is estimated to progressively rise to two per cent of GDP, which is a conservative level lower than the average of 3.2 per cent over the past 20 years. Overall, the ratio of government revenue to GDP will maintain at about 20 per cent.
284. In addition, the MRF reflects the proceeds from the annual issuance of government sustainable bonds and infrastructure bonds worth about $160 billion to $220 billion in total. After deducting bond repayments, the net proceeds from bond issuance each year range from $57 billion to $117 billion.
285. Based on the above projections, there will be a surplus in the Operating Account for each of the next five years, while the Capital Account will still record a deficit due to expenditure on infrastructure. After taking account of net proceeds from the issuance of bonds, the Consolidated Account will register a surplus in each of the next five years. The above forecast has not taken into account any tax concessions or relief measures that the Government may implement after 2027‑28.
286. Fiscal reserves are estimated at $733.7 billion by the end of March 2031, representing 17.3 per cent of GDP, or equivalent to about 10 months of government expenditure.
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