Ernst & Young predicts budget surplus of HK$57b

Contrary to the government's deficit forecast of HK$3.4b.

In a release, Ernst & Young noted that it estimates that 2012-2013 will return a budget surplus of HK$57 billion instead of a deficit of HK$3.4b as forecast by the government in february 2012.

Based on the government's quarterly accounts as of 31 December 2012, Ernst & Young notes that the fiscal position for 2012/13 has imporved rapidly since Oct 2012 with record level of revenues being collected in both Novemebr and December 2012.

The government has also sold more than 20 pieces of land and collected higher than expected stam duty from active stock and property markets. These receipts, together with a level of expenditure expected to be lower than that originally estimated, will turn the originally budgeted deficit into a surplus for 2012-13.

The expected budget surplus for for 2012-13 will propel Hong Kong's fiscal reserves to HK$726.1b by the end 31 March 2013, amounting 38.5% of Hong Kong's estimated 2012 GDP.

Combining such a level of fiscal reserves with the net accumulated surplus on the Exchange Fund amounting to HK$623.7b as of December 31 2012 will result in Hong Kong's effective fiscal reserves totalling around HK$1.3 trillion. Such a figure will represent 71.5% of the GDP of Hong Kong.