Hong Kong Financial Secretary Paul Chan Mo-po speaks during the first meeting of the Task Force on Promoting and Branding Hong Kong on Jan 31, 2023. (PHOTO / HKSAR GOVERNMENT)
Hong Kong is in need of more support for investment to strengthen its economic recovery even as a high fiscal deficit has accumulated, Financial Secretary Paul Chan Mo-po said on Sunday.
Writing in his blog, Chan expressed his cautiously optimistic expectations for the economy when speaking about the challenges in preparing the city’s upcoming budget, which is due to be unveiled this Wednesday.
The challenges we are facing this year (are) that a high fiscal deficit has accumulated after three years of the pandemic and a weak external economy. But the economic recovery still needs to be consolidated and investment in the future needs to be strengthened.
Paul Chan Mo-po, financial secretary of the HKSAR
“The challenges we are facing this year (are) that a high fiscal deficit has accumulated after three years of the pandemic and a weak external economy. But the economic recovery still needs to be consolidated and investment in the future needs to be strengthened,” Chan said.
Hong Kong’s economy shrank by a worse-than-expected 3.5 percent last year according to advanced figures from the Census and Statistics Department, marking the third contraction in four years.
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Chan said Hong Kong’s fiscal reserves had “inevitably” declined as the government adopted expansionary fiscal policies and counter-cyclical measures during the pandemic, which eased the pressure on citizens and enterprises.
He said the city is on the road to normality and the economy is regaining momentum, adding that the constraints on financial resources would not stop the government from boosting economic performance and improving livelihoods.
Secretary for Financial Services and the Treasury Christopher Hui Ching-yu said the government should not roll out relaxed policies for long or on a large scale, but must strike a balance between tightening and economic stability.
After three years of the pandemic, Hong Kong’s fiscal reserves dropped to around HK$800 billion ($102 billion), or 12 months of government expenditure, the treasury chief said. Previously, fiscal reserves had been sufficient to cover more than 20 months of spending.
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Starry Lee Wai-king, chairwoman of the Democratic Alliance for the Betterment and Progress of Hong Kong, called on the government to launch a new round of the consumption voucher program to capitalize on the border reopening and to further promote consumption.
Lawmaker Kitson Yang Wing-kit, for the Kowloon Central geographical constituency, concurred. He said the government should launch HK$5,000 consumption vouchers to alleviate the economic burden on the poor.
Yang also said Hong Kong is lagging far behind in terms of encouraging childbearing, and more measures to increase the birth rate should be introduced, such as increasing child allowance payments.
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