Surplus maintains good credit rating
Continued growth and a return to government surpluses have helped Hong Kong maintain its long and short-term foreign and local currency ratings.
Fitch Ratings yesterday affirmed Hong Kong's AA-minus foreign currency rating and its AA-plus local currency rating, while at the same time maintaining the short-term rating at F1-plus and the country ceiling at AA. The ratings determine the ease and cost of borrowing for governments and the private sector alike.
'Most important for Hong Kong's sovereign rating has been the elimination of the fiscal deficit,' said Fitch senior director James McCormack, who urged the government to reduce the volatility of its income.
'We believe a goods and services tax is a good solution for Hong Kong as it allows the city to maintain its low direct-tax burden,' he said.
It was probably inevitable that the tax, set between 3 and 5 per cent, would be introduced and the earliest Fitch saw this happening was 2008.