The government will continue strictly containing the growth of its operating expenditure, Chan said. “Bureaux and departments will make sustained efforts to review their resource allocation and work priorities, and provide public services with better cost-effectiveness through consolidating internal resources, streamlining procedures and leveraging technology.”

On the premise that Comprehensive Social Security Assistance, Social Security Allowance and statutory expenditures will not be affected, the government's recurrent expenditure will be cut by 2 percent in both 2026‑27 and 2027‑28, further saving about HK$7.8 billion and HK$15.6 billion, respectively, over 2025‑26.

The civil service establishment will be reduced by 2 percent in each of the coming two financial years to an estimated level of about 188,000 posts by April 1, resulting in a cumulative deletion of over 10,000 posts within this term of government, he added.

The finance chief proposed increasing the basic allowance and single parent allowance from HK$132,000 to HK$145,000, and the married person's allowance from HK$264,000 to HK$290,000, which will benefit about 2.09 million taxpayers and reduce tax revenue by about HK$3.56 billion a year.

Also, child allowance and additional child allowance will be raised from HK$130,000 to HK$140,000, while the allowance for maintaining a dependent parent or grandparent aged 60 or above will be increased from HK$50,000 to HK$55,000.

He also proposed raising the deduction ceiling for elderly residential care expenses from HK$100,000 to HK$110,000 for taxpayers whose parents or grandparents are admitted to eligible residential care homes.

Paul Chan proposed reducing salaries tax, tax under personal assessment and profits tax for the year of assessment 2025/26 by 100 percent, subject to a ceiling of HK$3,000 – a reduction which will be reflected in the final tax payable for the year of assessment 2025/26.

He also proposed providing rates concession for domestic and non‑domestic properties for the first two quarters of 2026/27, subject to a ceiling of HK$500 for each rateable property.

He proposed an allowance for eligible social security recipients, equal to one month of the standard rate CSSA payments, Old Age Allowance, Old Age Living Allowance or Disability Allowance, while similar arrangements will also apply to recipients of the Working Family Allowance, altogether involving an additional expenditure of about HK$6.5 billion.

Revenue from stamp duties and profits tax over the past year has increased by nearly HK$50 billion compared to the original estimate thanks to robust stock market and an accelerated economic growth, said Chan. “In 2025‑26, the Operating Account will return to a surplus ahead of schedule, while the Consolidated Account will be broadly balanced after taking into account the net proceeds from bond issuance.”

In the medium term, the Operating Account will register a surplus throughout the period from 2026-27 to 2030-2031, while the Capital Account will still record a deficit annually, mainly due to a high-level of capital works expenditure, said Chan.

Stressing that Hong Kong’s public finances have seen significant improvement overall, he said: “We are striving to achieve fiscal balance in the economic cycle and ensure the resilience and sustainability of public finances.”

As the government will accelerate the development of the Northern Metropolis and other public works projects relating to the economy and people's livelihood, it plans to raise the total borrowing ceiling of green bonds and infrastructure bonds from HK$700 billion announced last year to HK$900 billion, Chan said in his speech.

About HK$160 billion to HK$220 billion worth of bonds will be issued in each of the next five years, about half of which will be used for re-financing the short-term debts incurred in recent years. During the MRF period, the ratio of government debt to GDP will rise from 14.4 percent to 19.9 percent, he said.

“I would like to reiterate that proceeds from bond issuance will be used to invest in infrastructure only, but not for government recurrent expenditure.”

Since the launch of the Re-employment Allowance Pilot Scheme one and a half years ago, over 37,000 placements have been made, Chan said, adding that the provision for the scheme will be increased to HK$222 million in the coming financial year.

Under the Employment Programme for the Elderly and Middle‑aged – which aims to encourage employers to hire persons aged 40 or above and provide them with on‑the‑job training – employers will receive a maximum on-the-job training allowance of HK$5,000 per month for three months to 12 months for employing each eligible person. The program subsidized nearly 4,500 placements last year.

Besides, the Employees Retraining Board has launched two new courses dedicated for persons aged 50 or above.

The government will increase the number of Community Care Service Vouchers for the Elderly by 4,000 to 16,000 and the number of Residential Care Service Vouchers for the Elderly by 1,000 to 7,000 from the next financial year, involving an estimated full-year expenditure of HK$1.2 billion and HK$1.97 billion, respectively.

Starting this month, the Residential Care Services Scheme in Guangdong has included two more residential care homes for the elderly (RCHEs), resulting in total 26 RCHEs covering all nine cities of the GBA, said Chan.

The government will also implement new arrangements for portable cash assistance in the middle of this year, under which elderly participants of the Guangdong Scheme, Fujian Scheme and Portable Comprehensive Social Security Assistance Scheme may opt to receive government assistance direct through their accounts with designated mainland banks.

The government will provide young people with more exchange and internship opportunities in the mainland and overseas, including allocation of an additional HK$60 million for implementing the HYAB Funding Scheme for International Youth Exchange continuously.

The annual funding for the Women Empowerment Fund will be increased to HK$30 million starting from the next financial year, while the number of service places of aided standalone child care centers has exceeded 1,530 – an increase of about 12 percent over 2025 – to strengthen the support for working families, said Chan.

The government will enhance rehabilitation services by providing about 450 additional places for day, residential and pre‑school services in the next financial year, involving an additional annual expenditure of about $107 million.

Actively implementing Hong Kong's Climate Action Plan 2050, the government has injected a total of HK$400 million since the establishment of the Green Tech Fund and approved a number of projects, including production and storage of hydrogen fuel and the technology of turning waste into resources, etc, said Chan.

“Pursuant to the Strategy of Hydrogen Development in Hong Kong, we will formulate hydrogen standard certification,” he said. The government will continue issuing sustainable bonds, establishing an enabling regulatory environment and strengthening cross-sectoral collaboration. The HKMA, meanwhile, has been refining the Hong Kong Taxonomy for Sustainable Finance to more effectively address the financing needs of relevant projects.

“We will support the exploration with the Mainland and international multilateral financial institutions of the establishment of a Hong Kong-based Green Technology Projects Accelerator.”

Referring to outstanding results achieved by Hong Kong athletes on the international stage, Chan said the government will inject HK$1.2 billion into the sports portion of the Arts and Sport Development Fund to further promote sports development.

“We will continue promoting Hong Kong as a center for major international sports events and developing sports as an industry through the "M" Mark System. We will continue working with Kai Tak Sports Park Limited to proactively attract more major international sports events and activities.”