The government has backed a request by CUHK Medical Centre to extend a loan repayment period, saying it doesn't want to end up having to take back the hospital's site due to a default.

In 2023, legislators agreed to a two-year extension to repayments of a HK$4 billion government loan, in view of financial difficulties brought on by the pandemic.

The medical centre is now seeking another extension, of three years, saying it expects to make losses in the current financial year as well as in the next one, and its cash balance is insufficient to cover the repayments at present.

At a Legco panel meeting on Friday, some lawmakers expressed concern that by 2028, the Chinese University would still be struggling to pay off the loan.

"What will the hospital do to tackle such a big funding gap? I'm sure no one wants the hospital to come back to Legco for another repayment extension after three years," said DAB lawmaker Chan Wing-kwong, with the party's Starry Lee echoing his concerns.

The chairman of the university's council, John Chai, told legislators that the medical centre will cut costs and find ways to boost revenue, for example by introducing more in-patient beds.

"There are a pocket of measures, including strengthening the business model through governance, through better management of the operations, looking into means of increasing avenues of revenue, looking into resource efficiency," Chai said.

Health Secretary Lo Chung-mau said if Legco doesn't approve the new extension before the middle of next month, CUHK will have to start repaying a first instalment of over HK$550 million.

"If the medical centre fails to repay the loan, it is clearly stipulated in the contract that there will be an additional interest rate of three percent per annum," Lo said.

"If it still fails to repay the loan in the worst case scenario, the government will take back the medical centre, including the site and all the buildings or structures. We don't want to see this situation."

The extension request will be submitted to Legco's Finance Committee for further discussion.