Hong Kong Financial Secretary Paul Chan unveiled the 2026 budget on Wednesday, emphasizing investments in artificial intelligence and infrastructure while facing criticism for the absence of direct cash handouts to residents. The budget projects a surplus and includes a rare transfer from the Exchange Fund.
Hong Kong Financial Secretary Paul Chan Mo-po presented the annual budget on February 25, 2026, forecasting a consolidated surplus of HK$2.9 billion—the first in four years—and surpluses for the next five years. The budget includes about HK$22 billion in relief measures for residents and businesses, up from HK$7.8 billion last year, covering tax reductions and other supports.
A key proposal is transferring HK$150 billion from the Exchange Fund over two years to fund infrastructure projects like the Northern Metropolis and San Tin Technopole. This rare extraction of investment income from the fund—last done in 1984—aims to accelerate innovation and technology development, aligning with national goals. It includes launching an AI+ strategy led by a committee chaired by Chan to drive industrial reform, promote AI in banking, and enhance AI literacy across society.
The budget also establishes an Advisory Committee on Tax Policy, chaired by Chan, to review taxes on the virtual asset sector and emerging industries while offering incentives to attract business and investment. Value-added taxes, including goods and services tax, are explicitly ruled out. Additional measures target boosting offshore yuan and gold trading to reinforce Hong Kong's role as a global financial centre.
At a Thursday radio forum, Chan defended the budget against complaints of insufficient public support, stressing the need to balance finances with long-term city benefits. He noted alternative ways to return money to pockets, such as tax allowances, reductions, and events to draw tourists. Resident Tang said: “I am disappointed that giving out money or consumption vouchers has fallen off the radar. You hold a consultation every year, but you never listen … the budget consultation is meaningless.”
Chan plans to brief credit-rating agencies and the International Monetary Fund next month on the budget, including the Exchange Fund transfer. The plan signals the government's shift to a more interventionist role in the economy, moving beyond laissez-faire principles to actively match capital and land with strategic opportunities.
