The Hong Kong government has estimated a budget surplus of HK$2.9 billion after three consecutive years in the red, Financial Secretary Paul Chan has announced in his 2026 budget speech.

Chan, delivering his address at the Legislative Council on Wednesday, announced the estimated surplus after the government gradually narrowed a deficit over the course of three years, driven by an increase in profits tax and stamp duties.

“Taking into account the issuance of government bonds of HK$155 billion and repayments of HK$51.7 billion, it is expected that the consolidated account will register a surplus of HK$2.9 billion,” the finance minister said.

Citing a “buoyant equity market and an accelerated economic growth,” Chan said the government is estimated to rake in HK$99.5 billion in stamp duties, while logging about HK$209 billion in profits tax.

However, he remained cautious on land premiums: “[A]s the residential property market has just stabilised while the commercial property market remains relatively sluggish, government revenue from land premium stays low with the revised estimate at HK$17.5 billion, lower than the original estimate by HK$3.5 billion.”

The capital account will continue to record a deficit due to low revenue from land premiums along with high infrastructure spending relating to the Northern Metropolis megaproject as well as other public works projects.

Fiscal reserves are expected to hit HK$657.2 billion by March 31 as the current fiscal year comes to a close, he added.

Earlier in his speech, Chan pointed to 3.5 per cent growth in the overall economy. “External trade remained strong, private consumption rebounded, and fixed investment accelerated,” he said.

The city logged a HK$80.3 billion deficit in the 2024-25 fiscal year marking the third shortfall in a row, after recording and HK$101.6 billion deficit the previous year, and a HK$122 billion shortfall in 2022-23.

See also: LIVE: Hong Kong Budget 2026

The finance chief last year said that the government would cut spending by 7 per cent for three years.

Chan said in a Sunday blog post that the city has made a “good start” building on the economic growth recorded last year.

“Nevertheless, amid a volatile external environment and uncertainties arising from economic transformation, we must exercise fiscal prudence,” he said.

“We will take into account the needs of our society in the short, medium and long term, while maintaining adequate reserves to meet unforeseen circumstances.”