In response to ongoing public discussions concerning the hefty fiscal deficit, Hong Kong Financial Secretary Paul Chan Mo-po said at a forum on Friday that the special administrative region government is tackling the issue mainly by cutting expenditures, and is wary of increasing revenue through measures like raising taxes.

At the forum, titled “Innovation for Change to Build the Future”, hosted by the Chinese General Chamber of Commerce, Chan said the government is reluctant to impose any potential tax increases, because it needs to consider how they might affect Hong Kong’s competitiveness and its ability to attract investment, and their impact on both businesses and residents.

Amid growing public concern about possible tax reforms to broaden the tax base, he said the current focus should be on attracting investment and driving economic growth. The fiscal pressures are now mainly managed through measures such as freezing the civil service headcount and reducing the size of the government workforce by leveraging technology, he said.

Chan projected earlier that the deficit for the 2024-25 fiscal year will expand from the originally estimated HK$48.1 billion ($6.2 billion) to almost HK$100 billion.

Despite the fiscal stress, Chan said, the government will not scale back on infrastructure spending and emphasized that the development of the Northern Metropolis will not be delayed. The government plans to maintain an average annual infrastructure expenditure of HK$90 billion over the next few years, he added.

Chan said it is important to leverage market financing to support infrastructure development, including bond issuances. He said if the plan to issue bonds of between HK$120 billion and HK$130 billion annually is followed and some previous debts mature each year, the debt to-GDP ratio will be 13 to 14 percent in five years, which is “a relatively low ratio” and conducive to fiscal health.

The forum also explored Hong Kong’s economic outlook this year.

Representatives from international chambers of commerce said they are optimistic or cautiously optimistic about the city’s economy.

Jacky Foo, chairman alternate of the Singapore Chamber of Commerce (Hong Kong), said there has been a growing number of Singaporean companies with operations in Hong Kong. One of the attractions of the city, he said, is the range of government measures that allow foreigners in Hong Kong to easily travel between the Chinese mainland and the city.

Inaki Amate, chair of the European Chamber of Commerce in Hong Kong, said the companies in the financial services sectors are positive, and have indicated they believe there are still many reasons to keep their operations in Hong Kong.

Contact the writer at irisli@chinadailyhk.com