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Working Group on Long-Term Fiscal Planning

Fiscal Projections

The report of the Working Group on Long-Term Fiscal Planning has set out the long-term fiscal projections of the Government up to 2041-42. This tool serves to illustrate the projections under different macroeconomic assumptions and expenditure scenarios and aims to facilitate readers’ better understanding of the report.

The projections are based on the current policies and service levels, including the new policies and initiatives announced in the 2014 Policy Address or reflected in the 2014-15 Budget. Please refer to the report for more details of the methodologies, assumptions and limitations in making the projections.

Please choose a macroeconomic case and an expenditure scenario -

Macroeconomic Cases:

Real GDP would grow at an average rate of 2.8% per annum
Real GDP would grow at an average rate of 3.3% per annum
Real GDP would grow at an average rate of 2.4% per annum
A hypothetic assumption that the Hong Kong economy would dip into a recession in 2015 and 2016. Real GDP would grow at an average rate of 2.0% per annum.

Expenditure Scenarios:

Recurrent expenditure for education, social welfare and health services would only be adjusted to reflect demographic and price changes. No policy change and no service enhancement beyond those committed in the 2014 Policy Address is assumed. Other expenditure would remain as a constant share of GDP.
With the No Service Enhancement Scenario as building block, recurrent expenditure for education, social welfare and health services would increase by an extra 1% every year to cater for service enhancement.
With the No Service Enhancement Scenario as building block, recurrent expenditure for education, social welfare and health services would increase by an extra 2% every year to cater for service enhancement.
With the No Service Enhancement Scenario as building block, recurrent expenditure for education, social welfare and health services would increase respectively by an extra 3.86%, 2.8% and 2.63% every year to cater for service enhancement, trailing historical trends

Revenue and Expenditure Projections -
Base Case, No Service Enhancement

Graph of Revenue and Expenditure Projections

Fiscal Reserves / Debt Balance -
Base Case, No Service Enhancement

Graph of Fiscal Reserves / Debt Balance

Under the selected assumptions, the projected fiscal outlook would be -

Living with surplus
(from 2014-15 to 2028-29)		 Government revenue would exceed government expenditure during this period. Fiscal reserves would be able to build up to $1,398 billion by 2028-29.
Living on reserves
(from 2029-30 to 2040-41)		 Structural deficit would start in 2029-30. The Government would be dipping into the fiscal reserves to fund the shortfalls.
Living on borrowing
(2041-42)		 The fiscal reserves would be depleted in 2041-42. The Government would have no choice but to borrow to make ends meet. Debt liabilities would reach $271 billion, or 3.8% of nominal GDP, by 2041-42.
Living with surplus
(from 2014-15 to 2023-24)		 Government revenue would exceed government expenditure during this period. Fiscal reserves would be able to build up to $1,152 billion by 2023-24.
Living on reserves
(from 2024-25 to 2033-34)		 Structural deficit would start in 2024-25. The Government would be dipping into the fiscal reserves to fund the shortfalls.
Living on borrowing
(2034-35 to 2041-42)		 The fiscal reserves would be depleted in 2034-35. The Government would have no choice but to borrow to make ends meet. Debt liabilities would reach $3,188 billion, or 44.9% of nominal GDP, by 2041-42.
Living with surplus
(from 2014-15 to 2021-22)		 Government revenue would exceed government expenditure during this period. Fiscal reserves would be able to build up to $1,031 billion by 2021-22.
Living on reserves
(from 2022-23 to 2030-31)		 Structural deficit would start in 2022-23. The Government would be dipping into the fiscal reserves to fund the shortfalls.
Living on borrowing
(2031-32 to 2041-42)		 The fiscal reserves would be depleted in 2031-32. The Government would have no choice but to borrow to make ends meet. Debt liabilities would reach $6,542 billion, or 92.1% of nominal GDP, by 2041-42.
Living with surplus
(from 2014-15 to 2020-21)		 Government revenue would exceed government expenditure during this period. Fiscal reserves would be able to build up to $943 billion by 2020-21.
Living on reserves
(from 2021-22 to 2027-28)		 Structural deficit would start in 2021-22. The Government would be dipping into the fiscal reserves to fund the shortfalls.
Living on borrowing
(2028-29 to 2041-42)		 The fiscal reserves would be depleted in 2028-29. The Government would have no choice but to borrow to make ends meet. Debt liabilities would reach $10,965 billion, or 154.3% of nominal GDP, by 2041-42.
Living with surplus
(2014-15 to 2041-42)		 Government revenue would exceed government expenditure throughout the projection period. Fiscal reserves would be able to build up to $4,433 billion, or 50.1% of nominal GDP, by 2041-42.
Living with surplus
(from 2014-15 to 2033-34)		 Government revenue would exceed government expenditure during this period. Fiscal reserves would be able to build up to $1,606 billion by 2033-34.
Living on reserves
(2034-35 to 2041-42)		 Structural deficit would start in 2034-35. The Government would be dipping into the fiscal reserves to fund the shortfalls. Fiscal reserves would drop to $1,139 billion, or 12.9% of nominal GDP, by 2041-42.
Living with surplus
(from 2014-15 to 2024-25)		 Government revenue would exceed government expenditure during this period. Fiscal reserves would be able to build up to $1,138 billion by 2024-25.
Living on reserves
(from 2025-26 to 2034-35)		 Structural deficit would start in 2025-26. The Government would be dipping into the fiscal reserves to fund the shortfalls.
Living on borrowing
(2035-36 to 2041-42)		 The fiscal reserves would be depleted in 2035-36. The Government would have no choice but to borrow to make ends meet. Debt liabilities would reach $2,676 billion, or 30.2% of nominal GDP, by 2041-42.
Living with surplus
(from 2014-15 to 2021-22)		 Government revenue would exceed government expenditure during this period. Fiscal reserves would be able to build up to $977 billion by 2021-22.
Living on reserves
(from 2022-23 to 2029-30)		 Structural deficit would start in 2022-23. The Government would be dipping into the fiscal reserves to fund the shortfalls.
Living on borrowing
(2030-31 to 2041-42)		 The fiscal reserves would be depleted in 2030-31. The Government would have no choice but to borrow to make ends meet. Debt liabilities would reach $7,497 billion, or 84.7% of nominal GDP, by 2041-42.
Living with surplus
(from 2014-15 to 2023-24)		 Government revenue would exceed government expenditure during this period. Fiscal reserves would be able to build up to $1,171 billion by 2023-24.
Living on reserves
(from 2024-25 to 2033-34)		 Structural deficit would start in 2024-25. The Government would be dipping into the fiscal reserves to fund the shortfalls.
Living on borrowing
(2034-35 to 2041-42)		 The fiscal reserves would be depleted in 2034-35. The Government would have no choice but to borrow to make ends meet. Debt liabilities would reach $3,480 billion, or 61.1% of nominal GDP, by 2041-42.
Living with surplus
(from 2014-15 to 2021-22)		 Government revenue would exceed government expenditure during this period. Fiscal reserves would be able to build up to $1,064 billion by 2021-22.
Living on reserves
(from 2022-23 to 2030-31)		 Structural deficit would start in 2022-23. The Government would be dipping into the fiscal reserves to fund the shortfalls.
Living on borrowing
(2031-32 to 2041-42)		 The fiscal reserves would be depleted in 2031-32. The Government would have no choice but to borrow to make ends meet. Debt liabilities would reach $6,097 billion, or 107.1% of nominal GDP, by 2041-42.
Living with surplus
(from 2014-15 to 2020-21)		 Government revenue would exceed government expenditure during this period. Fiscal reserves would be able to build up to $991 billion by 2020-21.
Living on reserves
(from 2021-22 to 2028-29)		 Structural deficit would start in 2021-22. The Government would be dipping into the fiscal reserves to fund the shortfalls.
Living on borrowing
(2029-30 to 2041-42)		 The fiscal reserves would be depleted in 2029-30. The Government would have no choice but to borrow to make ends meet. Debt liabilities would reach $9,180 billion, or 161.3% of nominal GDP, by 2041-42.
Living with surplus
(from 2014-15 to 2019-20)		 Government revenue would exceed government expenditure during this period. Fiscal reserves would be able to build up to $932 billion by 2019-20.
Living on reserves
(from 2020-21 to 2026-27)		 Structural deficit would start in 2020-21. The Government would be dipping into the fiscal reserves to fund the shortfalls.
Living on borrowing
(2027-28 to 2041-42)		 The fiscal reserves would be depleted in 2027-28. The Government would have no choice but to borrow to make ends meet. Debt liabilities would reach $13,274 billion, or 233.2% of nominal GDP, by 2041-42.
Living on reserves
(from 2015-16 to 2022-23)		 Structural deficit would start in 2015-16. The Government would be dipping into the fiscal reserves to fund the shortfalls.
Living on borrowing
(2023-24 to 2041-42)		 The fiscal reserves would be depleted in 2023-24. The Government would have no choice but to borrow to make ends meet. Debt liabilities would reach $4,226 billion, or 88.8% of nominal GDP, by 2041-42.
Living on reserves
(from 2015-16 to 2021-22)		 Structural deficit would start in 2015-16. The Government would be dipping into the fiscal reserves to fund the shortfalls.
Living on borrowing
(2022-23 to 2041-42)		 The fiscal reserves would be depleted in 2022-23. The Government would have no choice but to borrow to make ends meet. Debt liabilities would reach $6,440 billion, or 135.3% of nominal GDP, by 2041-42.
Living on reserves
(from 2015-16 to 2020-21)		 Structural deficit would start in 2015-16. The Government would be dipping into the fiscal reserves to fund the shortfalls.
Living on borrowing
(2021-22 to 2041-42)		 The fiscal reserves would be depleted in 2021-22. The Government would have no choice but to borrow to make ends meet. Debt liabilities would reach $9,088 billion, or 190.9% of nominal GDP, by 2041-42.
Living on reserves
(from 2015-16 to 2020-21)		 Structural deficit would start in 2015-16. The Government would be dipping into the fiscal reserves to fund the shortfalls.
Living on borrowing
(2021-22 to 2041-42)		 The fiscal reserves would be depleted in 2021-22. The Government would have no choice but to borrow to make ends meet. Debt liabilities would reach $12,624 billion, or 265.2% of nominal GDP, by 2041-42.