HONG KONG - Hong Kong's Financial Secretary John Tsang said on Wednesday that there will be a small deficit in accounts in the coming years, and will largely achieve fiscal balance.

When delivering his budget speech on Wednesday, Tsang estimated that total government revenue for 2012-13 will be 390.3 billion HK dollars ($50.28 billion). Earnings and profits tax, estimated at 161.6 billion HK dollars, will still be the city 's major source of revenue. Land revenue is estimated at 60 billion HK dollars.

"I forecast a deficit of 2.5 billion HK dollars in the Operating Account and a deficit of 0.9 billion HK dollars in the Capital Account. There will be a deficit of 3.4 billion HK dollars in the Consolidated Account," he said.

"Fiscal reserves are estimated at 658.7 billion HK dollars by end-March 2013, representing approximately 34 percent of GDP or equivalent to 20 months of government expenditure," Tsang said.

He said he revised estimate for government revenue for 2011-12 is 433.1 billion HK dollars, 63.4 billion HK dollars higher than the original estimate. For government expenditure, he forecast that the revised estimate will be 366.4 billion HK dollars, 11.8 billion HK dollars less than the original estimate.

The operating expenditure for 2012-13 is estimated to be 315 billion HK dollars, an increase of 6 percent over the revised estimate for 2011-12. Recurrent expenditure will be 264.3 billion HK dollars.

Capital expenditure will be 78.7 billion HK dollars, including an all-time high of 62.3 billion HK dollars on capital works. Taking into account operating and capital expenditure, Tsang forecast that government expenditure will reach 393.7 billion HK dollars, an increase of seven percent compared with the revised estimate for 2011-12. Public expenditure will be equivalent to 21.4 percent of GDP.

For 2011-12, he forecast an operating surplus of 38.2 billion HK dollars and a surplus of 66.7 billion HK dollars in the Consolidated Account, equivalent to 3.5 percent of GDP. By March 31 2012, our fiscal reserves are expected to be 662.1 billion HK dollars, equivalent to 35 percent of GDP or 22 months of government expenditure.