Tax breaks, goodies in HK$120 billion package aimed at keeping ‘still fertile’ Hong Kong afloat through social unrest and coronavirus outbreak
- Financial Secretary Paul Chan unveils the most difficult and politically charged spending blueprint of his career, headlining it with HK$10,000 cash handout
- City’s fiscal reserves forecast to shrink to HK$937.1 billion by March 2025 from about HK$1.13 trillion, but Chan stands his ground on spending big
Unveiling the most difficult and politically charged spending blueprint of his career, Financial Secretary Paul Chan Mo-po announced an eye-catching, one-off payment of HK$10,000 to around 7 million adult permanent residents, as well as a much-needed lifeline to small and medium-sized enterprises.
Chan also reported the city’s first budget deficit in 15 years, of HK$37.8 billion, forecast to surge to a record HK$139.1 billion in the 2020/21 fiscal year.
“Although a record-high deficit is envisaged in next year’s budget, I believe that only with such a budget can we help our community and local enterprises ride out their difficulties,” Chan said in a 90-minute speech to the legislature, with the focus on the themes of “supporting enterprises, safeguarding jobs, stimulating the economy and relieving people’s burden”.
While the city’s fiscal reserves would stand at about HK$1.13 trillion by the end of March, Chan forecast, they could shrink to HK$937.1 billion by March 2025.
But the official position was that it was too early to say Hong Kong was entering a structural fiscal deficit cycle, as the economy could recover from the impact of the coronavirus when the public health emergency eventually ended.