Moody's rules out rating downgrade
International credit rating agency Moody's Investors Service will not downgrade Hong Kong's rating even though the Government is expected to see its fiscal reserves eroded by $98.6 billion over the next five years.
Steven Hess, vice-president and senior analyst at Moody's, said the territory would still remain one of the largest holders of currency reserves in the world.
'The Hong Kong Government is a rare example worldwide in that it has a huge sum of reserves and no foreign debt,' he said. 'In many other countries, the Government has limited reserves but a huge amount of debt.'
In his Budget Mr Leung said the reserves, worth about $369.8 billion, would fall to $271.2 billion by 2006-07 due to a deficit over the next five years. This would make the reserves equal to 12 months' of government expenditure, instead of 19 months.
Mr Hess said it was sensible for the Government to lower the target reserve level at a difficult time. But he also felt the Government should do more to address the deficit.