Finance
Opinion | How infrastructure borrowing can benefit Hong Kong for decades to come
This proposal makes sense. Hong Kong’s public debt to gross domestic product ratio is extremely low by international standards; the government therefore has the space and creditworthiness to borrow more – even though interest rates today are higher. There is also a strong economic case to rely on debt financing for infrastructure projects which incur costs today but generate benefits for the next few decades.
Nonetheless, there are concerns among some that such borrowing only deepens the government’s financial hole, burdens future generations, and masks the precarity of government finances. Rather than dismiss these concerns as invalid or ignorant, the government should engage seriously with them and, in so doing, build society’s trust in its ability to manage Hong Kong’s finances well. This is also an opportunity to educate the public on why borrowing for infrastructure is not only necessary, but may even be desirable in the current macroeconomic context.
Necessary and desirable
The first principle of public financial management that the Treasury should convey is that all deficits have to be financed eventually. In this, the government has to choose between three unpalatable options: raising taxes, cutting spending, or borrowing. Raising taxes – particularly the introduction of a Goods and Services Tax (GST) – is probably something that Hong Kong must do eventually.
That leaves increased public sector borrowing as the least bad option to finance Hong Kong’s infrastructure plans.
The second idea that the Treasury should convey is that borrowing is the more efficient and equitable way of financing infrastructure. It is more efficient because the benefits of infrastructure development accrue over many years – even decades – and so it makes sense to finance that development over a similar time frame. Just as households make costly capital purchases (such as a property) by taking a 30-year loan rather than pay for it entirely with cash, it is also more efficient for the government to finance infrastructure projects (which generate a stream of benefits over many years) using debt.
Debt financing is also more equitable because future generations are the major beneficiaries of these infrastructure projects. Future generations are likely to be richer than current generations, so it is only fair that future generations pay at least part of the costs. Meanwhile, paying for these projects with cash upfront represents a large subsidy from past and current generations of Hongkongers to future, richer generations. This is highly regressive. Unless one is extremely pessimistic about Hong Kong’s future – and believes that future Hongkongers would be poorer than today’s Hongkongers – debt financing is much fairer in terms of intergenerational equity.
A debt sustainability framework
While increased borrowing is a better way to finance infrastructure development, this does not mean the government should be allowed to borrow as much as it wants or to spend however it likes. To build public trust, the Treasury should put in place, and articulate, a set of principles to ensure debt sustainability. Such a framework would also assuage concerns that the Hong Kong government is becoming a less prudent or capable steward of public funds.
The first principle is that debt financing should be used only for infrastructure projects in which assets that can be valued are created. This is critical because debt financing creates liabilities for future generations of Hongkongers. Good financial management requires that these liabilities be matched with corresponding, long-term assets. This rule also means the government should borrow only for capital, not operating, expenditures.
Second, alongside the budget (that shows the government’s income and expenditure of the coming financial year), the Treasury should also present a debt sustainability report which shows the government’s outstanding liabilities and the estimated value of the assets. This need not be done for all the state’s assets and liabilities, only for those that result from its borrowing. The first two principles would address concerns that issuing debt boosts the government’s revenue for the year but masks (future) debt repayment obligations.
Why Hong Kong’s economy needs to become more than just China’s superconnector
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Third, to the extent possible, the bonds the government issues should be linked to specific projects rather than be used for unspecified capital expenditure. While public funds are fungible (movable across various uses), this practice would require the government to make a strong case for the projects that it is borrowing for, and not rely only on its overall creditworthiness, to borrow at lower interest rates. This practice would also improve financial transparency and support the market’s scrutiny of the government’s development projects. Done well, this would establish Hong Kong as an issuer of high-quality government bonds, helping the city attract more capital through its bond market.
This principle does not mean the government would be barred from issuing bonds not linked to specific projects. But if it does so, it should have to explain why. Without this principle, governments always prefer more discretion over rules that constrain their flexibility or freedom of manoeuvre.
Finally, there should be a rule that sets a cap on the total stock of debt that the Hong Kong government owes, as well as a rule that limits (as a percentage of GDP) the amount of debt the government can issue in any one financial year. This would assure the public and financial markets that the government is still a disciplined steward of public funds.
Donald Low is Senior Lecturer and Professor of Practice, and Director of Leadership and Public Policy Executive Education, at the Hong Kong University of Science and Technology. He was formerly Director of Fiscal Policy at the Ministry of Finance in Singapore.
When Colangelo College of Business students step into the Charles Schwab Foundation Finance Center this fall, they might feel like they’ve stepped onto a trading floor instead of into a Grand Canyon University classroom.
Renovations, which will begin this summer, come just two months after the announcement that students will be providing research for a stock exchange-traded fund as part of the college’s partnership with Christian financial firm Faith Investment Services.
Plans for the finance center’s remodeling are to incorporate a large ticker board in the center of the room, flanked by two smaller ticker boards that will scroll stock exchange listings.
“The Schwab Center not only has the look and feel of Wall Street, but the latest Bloomberg technology for our students to execute their research assignments,” CCOB Dean John Kaites said.
The frosting on the glass wall along the main corridor of the first floor of the CCOB will be lowered enough to allow tour groups to see inside the room while not distracting students during class.
The space, which will accommodate 34 students, serves as a finance learning center and lab for exams designed to help students get certified for the finance industry.
Business college leaders see the changes as a way to raise the profile of the CCOB and Schwab Center.
“As our students experience real-life research for the New York Stock exchange traded ETF: FTHB, they will have a learning environment that is compatible with their work,” Kaites said.
GCU earned national attention when the FIS Faith Income exchange-traded fund was officially listed on the New York Stock Exchange (FTHB). This fund is believed to be the first ETF – a tradable fund containing a mix of investments organized around a strategy – that provides educational opportunities to students.
CCOB and College of Theology students research high-quality funds as part of that partnership. They are not paid for their work but receive valuable experience.
The CCOB lobby, used frequently for the T.W. Lewis Speaker series and club meetings, also will be remodeled. The northwest corner of the lobby, used often for studying and small gatherings, will be transformed into two offices. Space will remain so students can continue gathering and studying in that area.
The reception desk – where student workers often direct foot traffic at the busiest part of the four-story, 150,000-square-foot building – will be repositioned so it will face the college’s entrance.
The CCOB was revamped last summer to add the T.W. Lewis Center for Student Success, a multifaceted facility that features a broadcast studio with a stick ticker, a podcast room and a broadcast control room.
A Career Services Center also was added on the first floor.
GCU News senior writer Mark Gonzales can be reached at [email protected]
In Q1 2026, EfTEN United Property Fund earned 461 thousand euros in net profit (Q1 2025: 703 thousand euros). The decline in profit is primarily related to the Fund’s investment in EfTEN Real Estate Fund AS shares, whose price on the Tallinn Stock Exchange increased 2.9% in Q1 2026 compared with 4.5% in the same period of 2025. In addition, interest income from the investment in the development company Invego Uus-Järveküla OÜ decreased year-on-year, as the development company repaid the principal and interest of the shareholder loan to the Fund in full in mid-March.
Despite the decline in profit, EfTEN United Property Fund AS received record owner income from its underlying funds at the beginning of 2026. This forms the basis for the Fund’s first distribution of the year to investors in Q2 2026, in the amount of approximately one million euros. The distribution is based on dividends and income received from all underlying funds, as well as interest from the Invego Uus-Järveküla OÜ and the Menulio 7 office building shareholder loans. The distribution does not include the profit from the Invego Uus-Järveküla development project, which the Fund plans to distribute largely in the second half of the year.
Since EfTEN United Property Fund’s portfolio is diversified across nearly 50 different properties in the Baltic states, developments across all segments of the regional real estate market affect the Fund’s results. There have been no major changes in the Baltic commercial real estate market over the last few quarters. In the residential real estate market, however, sales of new developments have improved in all Baltic states. In Tallinn, monthly sales of new developments grew to approximately 160 units per month in Q1 2026, compared with an average of around 100 units in 2024 and the first half of 2025. The biggest jump in the Baltic states was made by the Vilnius new-development market, where — partly thanks to expectations of funds being released from the second pension pillar — Q1 2026 sales volumes reached all-time highs, at times reaching up to 700 units per month.
The pace of sales also remained strong at the start of the year in Invego Uus-Järveküla OÜ, the development company for the Uus-Järveküla residential district in which EfTEN United Property Fund holds an 80% stake. In the first quarter, 22 units were sold (real rights contracts signed) and reservation agreements were concluded for three terraced houses. As of the end of the quarter, 8 terraced houses in the development remain unreserved. In March, Invego Uus-Järveküla OÜ repaid its entire bank loan and returned the shareholder loan to the Fund in full (1.51 million euros) along with the accrued interest (56 thousand euros). EfTEN United Property Fund invested a total of 3.52 million euros in the Uus-Järveküla development project in 2021 and 2023, and has to date received 4.8 million euros back.
Today, 2.2 billion people lack access to safely managed drinking water, and 3.5 billion people live without safely managed sanitation (UNSD, 2024). Action is urgently needed. AIIB’s recent Where the Water Flows report offers clear pathways for addressing these challenges in an increasingly destabilized hydrological environment. Yet, financing remains insufficient: an additional USD 140.8 billion in investment is needed annually to meet SDG targets 6.1 and 6.2 by 2030 (World Bank, 2024).
Traditional water funding modalities – tariffs, taxes, and transfers – are under strain, jeopardizing sustained investment and potentially widening the funding gap. Innovative governance models and financing solutions have a critical role to play in this evolving landscape. As the World Bank operationalizes its new global initiative Water Forward, there is a growing need for alignment and dialogue on the strategic allocation of capital for water, alongside the potential of new financing and governance models.
This event, held on the sidelines of the IMF and World Bank Spring Meetings, convened water finance practitioners actively leveraging innovative governance and financial approaches to fund water in emerging markets.
Opening remarks were delivered by Zou Jiayi, President and Chair of the Board of Directors, AIIB.
Speakers included:
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