Financial Secretary Paul Chan on Monday said while Hong Kong's capital account, which is used to finance large infrastructure projects such as the Northern Metropolis, was facing higher deficits, the city's operating account was still largely balanced.

"On the operating account, our aim is to return it to balance as soon as possible, and start to register surplus. The coming [financial] year, in 2025-2026, we will be largely in balance. The deficit is only about HK$4 billion. When you take it into the context of the government expenditure of over HK$600 billion a year, I would call that largely balanced. And then the year after, 2026-2027, we [will] start to have an operating surplus," he said.

He added the city must expedite the development of the Northern Metropolis so as to drive the SAR's technological growth, but that would also mean the government's capital account would be under an imbalanced fiscal situation in the short term due to the gap between revenue and expenditure.

"In order to match the cash flow requirements. We can consider issuing some bonds with longer tenor. That is possible. But at the same time, I have to wait and balance between cost of borrowing and the tenor," he added.

There have been concerns over the city's rising debt, given authorities' plan to issue up to HK$195 billion worth of bonds annually over the coming five years.

But Chan stressed the city's debt levels remain low and it should make good use of its borrowing capacity to meet the capital account cash flow gap.