Hong Kong will eliminate 10,000 civil service jobs by 2027 while committing $1.29 billion to artificial intelligence development as part of aggressive measures to address its $11.2 billion deficit. Finance Secretary Paul Chan announced these reforms Wednesday, calling them 'essential steps' to stabilize the city's finances through 2028.
The government plans a 7% reduction in recurrent expenditure over four years, with immediate salary freezes for public workers.
This gives us a clear pathway toward restoring fiscal balance,Chan stated during his budget address.
Key financial interventions include:
- 67% airport departure tax increase to $25.70 effective July 2024
- $25 billion bond issuance for infrastructure projects
- $10 billion Innovation Fund targeting strategic tech sectors
The deficit crisis stems from a 30% property market collapse since 2021 and plummeting land premium revenues – once 20% of government income now barely 5%. With fiscal reserves projected to shrink 22% by 2026, officials aim to position Hong Kong as an international AI cooperation hub through new research institutes and cross-border partnerships.
Analysts note these measures test Hong Kong's balancing act between austerity and maintaining its competitive edge in fintech. The AI investments particularly signal attempts to offset traditional revenue losses through emerging industries, though critics question if tech returns can match historical property earnings.