HONG KONG — As the United States prepares for mandatory budget cuts Friday under so-called sequestration legislation, Hong Kong is grappling with a very different problem: spending money as fast as it sluices into government coffers.

John Tsang, the financial secretary of the semiautonomous Chinese territory, announced Wednesday a budget that calls for a long list of one-time subsidies, particularly for the poor and elderly.

The stimulus measures follow heavy criticism in Hong Kong that the government consistently produces large budget surpluses, even during periods of weak economic growth, including the past year. The Hong Kong economy grew only 1.4 percent last year, well below its average of 4.5 percent over the past decade.

The Asian financial hub consistently runs budget surpluses mainly because it has low social spending and no military to fund. By comparison, the federal government in the United States dedicates about half its spending to assistance to the elderly and directs another quarter of its spending to the military.

The Hong Kong government is sharply increasing social spending in percentage terms, but from such a low base, this expenditure still falls short of revenues. And after years of accumulated surpluses, the city is sitting on fiscal reserves accumulated from previous surpluses equal to 23 months’ total spending.

Some of the heaviest criticism of previous budgets has come from activists speaking on behalf of what are known locally as the “multiple have-nots.”

These are low-income residents, often young, who have not been on the waiting list long enough to qualify for public rental housing, so they will not benefit from the two-month rent waiver announced Wednesday by Mr. Tsang, the financial secretary. Nor are they destitute enough to qualify for the extra month of welfare payment that was announced. And they live in shared apartments where they may not benefit directly from the government’s subsidy in the coming fiscal year of 1,800 Hong Kong dollars, or about $230, for each residential electricity bill.

Focusing help on this group of people, Mr. Tsang announced that the government would give an extra 15 billion dollars to the government-controlled Community Care Fund, which conducts social work, like offering rent assistance.

“I have every confidence that we will be able to assist more people in need, particularly that group of people who used to complain that they were being left out from the budget relief measures — the so-called multiple have-nots,” Carrie Lam, the territory’s chief secretary, said Wednesday.

Marcellus Wong, a senior adviser in the Hong Kong office of PricewaterhouseCoopers, noted that Mr. Tsang’s figures showed that government spending had risen twice as fast as economic output over the past 15 years, and expenditures were creeping above 20 percent of output. “The government needs to closely monitor this benchmark,” he said.

The Hong Kong government uses very conservative budget forecasts, consistently predicting small deficits that turn into large surpluses. The government predicted a year ago that it would run a deficit of 3.5 billion dollars for the fiscal year through the end of March, but its most recent estimate is that it will run a surplus of 64.9 billion dollars instead. Mr. Wong predicted that the final figure would be a surplus of more than 70 billion dollars.

Social spending has stayed low until now partly because Hong Kong has a single-payer government health care system with low pay for doctors and nurses by U.S. standards But recurrent social spending is on track to rise 33 percent in the coming year, mainly because the government is introducing a monthly payment of 2,200 dollars to all low-income elderly residents.

Hong Kong has also begun gradually building a mandatory retirement savings system based on bank-managed mutual funds. But many elderly residents retired before it was started.

In western Hong Kong island, an area with a large population of senior citizens, four elderly people on the street each said that they did not expect much money from the government because they lived with their children.

A fifth, Wu Jinyao, a retired construction worker who is recovering from oral cancer, complained that the government was too frugal in promising an extra one-month payment of disability allowances in the coming fiscal year, because he had high medicine and transportation costs. “I have been to the various government agencies and they tell me to come back when I am down to my last 500 Hong Kong dollars. What system is this?” he said.

Hilda Wang contributed reporting

Article source: http://www.nytimes.com/2013/02/28/business/global/hong-kong-officials-unveil-budget.html?partner=rss&emc=rss