Financial Secretary Paul Chan said containing government spending would be a top priority for the administration in the coming years as he outlined plans for job cuts, pay freezes and reducing expenditure.

Chan said he had instructed all bureaux and departments to review their resource allocation and work priorities, and provide public services in a more cost-effective manner by consolidating internal resources, streamlining procedures and leveraging technology.

These moves would lay a "sustainable fiscal foundation for future development", he said, with the government facing a deficit of HK$87.2 billion.

The finance chief said that in the coming financial year, the government would implement pay freezes for civil servants, executive authorities, members of the judiciary as well as those serving in the legislative and district councils.

Among the cost cutting measures, Chan proposed the rate of reduction of recurrent government expenditure would be increased from the original one percent to two percent in the 2025‑26 financial year.

This arrangement would be extended for two more years to the 2027‑28 financial year.

Taking into account the one percent cut unveiled for the current financial year, the cumulative rate of reduction would be seven percent in total.

Chan said this would deliver a saving in recurrent government expenditure of around HK$62 billion in the coming financial years up to 2028.

The financial secretary also said the civil service would be reduced by two percent annually between the 2026-27 and 2027-28 financial years, resulting in about 10,000 jobs cut by April 1, 2027.

The cuts in spending will also affect the education sector.

Chan said the government would provide HK$68.1 billion to University Grants Committee-funded universities in the coming three years.

This funding has reflected a two percent reduction target each year, which was in line with the magnitude of government's recurrent expenditure cut.