Hong Kong’s massive fiscal reserves may be depleted within 11 years if the government goes ahead with its highly ambitious Lantau Tomorrow Vision reclamation plan, a new research report has warned.

The city was holding on to fiscal reserves of HK$1.1 trillion (US$141.9 billion), the annual budget released in February showed, and the Lantau plan, according to the government last year, would cost HK$624 billion to reclaim up to 1,700 hectares (4,200 acres) of land and artificial islands.

Financial Secretary Paul Chan said on Tuesday that the government would run a deficit of HK$300 billion, but would not give up on seeking funds to carry out preliminary research on the reclamation plan.

Following Chan’s comments, a new report jointly compiled by the non-governmental organization Greenpeace and the ACE Centre for Business and Economic Research was released, warning of the plan’s potential to place a heavy financial burden on government finances.

ACE director Andy Kwan told a RTHK morning show on Wednesday that Hong Kong would face a structural financial deficit as early as the 2021-22 financial year due to an aging population, as shown in research conducted by Chan’s predecessor, John Tsang, when he was in office.

When a structural financial deficit occurred, fiscal reserves would dry up and the government would not be able to sustain public finances, Kwan said. At that point, Hong Kong would see its ratings lowered and there might even be a crisis of confidence in the city’s long-running defense of the Hong Kong dollar’s peg to the United States dollar, he said.

Hong Kong might not have enough reserves to finish the entire reclamation project, which would start in 2025, as the coffers were expected to be emptied by 2031, Kwan said. He cautioned that the costs did not include connecting roads to the new artificial islands, and that an aging population might be unable to support high housing prices.

Senior Greenpeace campaigner Kate Lin said Hong Kong still possessed more than 800 hectares of private brownfield that could be used to build housing, so it was impractical to reclaim large tracts of land.

The waters to be affected by the Lantau Tomorrow Vision were unique in their ecological value, and the government had failed to respond to opposition over the reclamation, Lin said.

Pro-business Liberal Party leader Felix Chung said it was indeed difficult for the government to implement a project with such a high price tag, but the issue of land supply had to be dealt with as well. Chung suggested issuing bonds to raise funds for the Lantau project.

Kwan argued that issuing bonds would expose the government’s lack of financial capacity, opening it up to more attacks by ratings agencies as debts piled up.

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