Before stepping down at the end of last year, John Tsang Chun-wah became Hong Kong’s longest-serving financial secretary, holding the job for nine years. He stuck to the same cautious approach right to the end.
Hong Kong is known for recording a budget surplus every year and last year was no different. Driven by net income of $30 billion, Hong Kong’s fiscal reserves reached an all-time high of HK$835 billion as of the end of March 2016, and further extended to HK$908.3 billion as of the end of last year.
The government’s reserves are equivalent to over 35% of the city’s gross domestic product — one of the highest reserves among developed economies — and worth over 21 months of government expenditure. Few governments could boast the flexibility to operate for nearly two years without any income.
But the former financial secretary, who quit to join the race to be Hong Kong’s chief executive in December, has not been enticed by this strong position to launch a big, politically-beneficial spending boost. His last budget offered few surprises. Indeed, most of the measures Tsang put forward last year extened those advanced in 2014, including a salaries tax rebate and property tax concessions.
Addressing the city’s aging population, Tsang introduced a HK$3 billion silver bond for residents aged over 65. That was seen as another short-term measure while the government is unwilling to use its abundant reserves to back a proposed universal retirement scheme.
There are few things corporate executives look for from a finance minister more than reliability. John Tsang has certainly scored well on that front. But in 2016, he did little to stand out from an impressive crop.
We are counting down our Finance Minister of the Year rankings day by day. Tomorrow: a minister showing caution in a storm.