The budget proposals may cause some short-term pain in the present economic climate, but they are necessary to rein in the fiscal deficit,  the Financial Secretary says.

Speaking on a Commercial Radio programme this morning, Antony Leung noted that the deficit had ballooned to 5.5% of GDP. If it persists, it will undermine Hong Kong's financial stability and its credit rating, he explained.

Mr Leung made an apology to those affected by the proposals and assured them that the measures will help tackle the deficit without hindering economic recovery.

When asked how to bring in an additional $6 billion in revenue over the next few years, Mr Leung said he will work with Government bureaux to ensure that any cost-saving measures will not have a significant impact on the public.

He pointed out that the Government has been investing a lot in education, social and medical welfare. Reviews have been carried out so as to make the best use of resources.

He also explained that the decision to reduce tax in 1998 was made in view of the financial situation at that time.