Budget reveal: government turns matchmaker with stronger hand in shaping economy

Hong Kong’s finance chief on Wednesday lived up to his credentials as a chartered accountant when he produced a surprisingly robust budget, flush with surpluses and full of initiatives to be funded through substantial means at his disposal.

One significant initiative is a rare move to dip into the Exchange Fund, the government’s main investment arm and de facto sovereign wealth fund, traditionally used to defend the currency peg to the US dollar, to finance infrastructure development.

The results will take time but some unmistakable shifts in government’s management of the economy are on display here, the first of which is the financial hub’s decision to seize the opportunities arising from the national development plan and to align with the country’s wider goals.

Secondly, to do this, Hong Kong has to increasingly play a more decisive role in matching capital and land with the right bets. This is a far cry from the government’s earlier role of just allowing the free market to reign supreme.

While the laissez-faire approach has evolved in recent years, this year’s budget and its clear adoption of national goals suggest a consolidation in this direction, with the government playing a greater role in the economy.

Presenting an earlier-than-expected consolidated surplus of HK$2.9 billion (US$370.73 million) that took many by surprise, Financial Secretary Paul Chan Mo-po also forecast surpluses for the next five years.