Hong Kong May Face Second-Highest Fiscal Deficit Ever: Finance Chief

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Hong Kong may face second-highest fiscal deficit ever: finance chief

Hong Kong May Face Second-Highest Fiscal Deficit Ever: Finance Chief

TUESDAY, SEPTEMBER 20, 2022

Hong Kong’s Fiscal Deficit This Year Is Expected To Exceed HK$100 Billion ($12.74 Billion), Almost Double The HK$56.3 Billion Estimated In The Budget, Financial Secretary Paul Chan Mo-Po Said In His Blog On Sunday.

The deficit would mark the second-highest ever, behind only the HK$232.5 billion record in 2020, Chan said, adding that the number will be even worse if it excludes the HK$35 billion raised through the issuing of Green Bonds this year.

The government’s financial reserves may also fall further, to about HK$800 billion, the finance chief warned.

“Both the external economic momentum and conditions of local markets have encountered a strike by the pandemic and the tightened monetary policies of central banks,” he said.

Revenue from profits and salary taxes is going to fall short of expectations because of faltering exports, private consumption and investment, while stamp-duty and land-sale incomes are also weak, Chan added.

On Friday, the government announced it will further extend the rental or fee concessions applicable to government properties and short-term tenancies and waivers to alleviate enterprises’ financial pressures.

Chan said one of the government’s priorities is improving people’s livelihoods in the short and medium term while maintaining healthy and sustainable public finances at the same time.

According to recent research by the Hong Kong Trade Development Council released on Monday, Covid-19-related issues have remained among the top concerns for Hong Kong exporters over the next three months.

Five hundred Hong Kong traders from six major industry sectors, including clothing, electronics, jewellery, machinery, timepieces, and toys, were interviewed for the survey. COVID-19 persistence and the border closure, cited by 40.2 per cent and 22.6 per cent of respondents respectively, are the major impediments to export performance.

Exporters’ confidence improved slightly over short-term prospects, as evidenced by the HKTDC Export Index, which gained 1.9 points over the third quarter to 32.8. Yet an index reading below 50 still indicates pessimism.

In another telling finding, exporters are facing downward pressure on prices, as indicated by a fall in the Trade Value Index of 11.5 points to 40.2. The decline from above 50 to less reflects a shift from optimism to pessimism.

Irina Fan, HKTDC’s director of research, said a majority of the respondents in the latest exporters’ survey view the shortening of the mainland’s Covid-19 quarantine requirement, to seven days of isolation plus three days of home confinement, as positive for business.

Fan added that enabling more-flexible business travel arrangements, the gradual resumption of cross-border commerce and trade, and a smoother production flow were cited as top benefits.

On the bright side, the city’s jobless rate has improved this year from a high of 5.4 per cent in the February-April period to 4.3 per cent from May through July, and 4.1 per cent in the June-August period.

Chan said he also expects the second phase of electronic consumption vouchers, which will be issued from October 1, could inject over HK$15 billion into the market.

Liu Yifan

China Daily

Asia News Network

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