Chan told lawmakers at the Legislative Council that the deficit for the 2019-2020 fiscal year would be due to an adverse economic environment, decreased tax revenue and income from land sales, as well as relief measures announced during the year, reports Efe news.
"In the original budget, we had expected a surplus fund. But because of the economic downturn, tax returns have dropped. And in the middle of the year, we had some remedial measures, so at the end of the financial year, the SAR government will be in the red," said Chan, according to public broadcaster RTHK.
He also said the economy was expected to contract by 1.3 per cent in 2019 compared to the previous year.
Although this is the first time since 2004 that Hong Kong's economy will be in red, Chan underlined that they had accumulated "surplus over the years" that will leave SAR government "still in a healthy financial position".
The Secretary also mentioned the ongoing protests, which have continued for several months, claiming they have dealt a blow to the economy, and that they hoped people would help to end the violence.
"To restore the economy, different sectors have to come together to stop violence so that social order can be restored, citizens can return to normal life, businesses can resume normal operations, so that room can be created for rational dialog," he said.
Chan's statements comes a day after tens of thousands of civil returned to the streets across Hong Kong, and a week after the overwhelming victory of the pro-democracy camp at the local polls, seen as a barometer of public opinion on the protests.
The massive and often violent protests have been ongoing since June in opposition to a contentious extradition bill, which has since been dropped.
But the rallies have turned into a movement seeking to improve democracy in the city-state and safeguard the region's partial autonomy from Beijing.
( With inputs from IANS )