HK dollar doubts

Persistent deficits could undermine the stability of the Hong Kong dollar, according to a research report by DBS Bank. The report forecasts a HK$60 billion deficit for 2001-02, 20 times the official forecast of HK$3 billion. 'Using a scenario in which Hong Kong runs a persistent fiscal deficit of HK$50 billion for five successive fiscal years, HK$250 billion could easily disappear from fiscal reserves and the Exchange Fund,' the report said.