Leung recalls pay cuts to shield Hong Kong
Bastillepost · 1 SOURCESabout 2 hours ago5 MIN
Summary
Former financial secretary Antony Leung Kam-chung (梁錦松) has revisited the Tung Chee-hwa era decision to cut civil service pay and shrink the government workforce, saying the overriding concern was to rein in a swelling fiscal deficit before it undermined confidence in Hong Kong’s linked exchange rate system. He said that when he took office in May 2001, the budgeted deficit for that fiscal year had been HK$3 billion, but the eventual shortfall exceeded HK$60 billion. In his account, the government believed delaying action could leave Hong Kong more exposed to speculative attacks similar to those seen in 1998. He also acknowledged that the measures, followed by the 2003 SARS outbreak and a prolonged property slump, carried a heavy political cost for Tung’s administration
Key Points
- Leung said he joined as financial secretary in May 2001 at Tung Chee-hwa’s invitation, after Anson Chan resigned and Donald Tsang moved to chief secretary
- He said the fiscal deficit first presented at HK$3 billion later turned out to be more than HK$60 billion, about twenty times larger
- According to Leung, government spending rose from about 13% of nominal GDP in 1997 to 17% in 2001, outpacing economic growth and breaching balance goals
- He argued Hong Kong had to curb deficits to protect the linked exchange rate, warning speculators could return after the 1998 assault on the Hong Kong dollar
- His 2002 budget proposed civil service pay cuts that saved HK$6 billion in a year, while a later plan cut the establishment from 198,000 to 184,000
Why It Matters
Leung’s account reframes a deeply unpopular policy choice as a financial-stability decision tied to the defence of the Hong Kong dollar rather than a narrow cost-cutting exercise. For Hong Kong readers, it also revisits how fiscal discipline, the linked exchange rate and public-sector employment became tightly bound together during one of the city’s most volatile economic periods