Hong Kong budget deficit may be less than predicted: Finance secretary
The government had initially expected there would be a budget deficit of HK$101.6 billion for financial year 2021-22.
HONG KONG – Buoyed by the steady economic recovery and brisk trading in the city’s property market and equity market, Financial Secretary Paul Chan Mo-po hinted that the budget deficit for financial year 2021-22 may be less than was previously forecast.
“Fuelled by the brisk trading of the home and stock market, the stamp duties revenues from property and equity market transactions are better than expected, this has remarkably moderated the pressure of registering a large-scale government budget for the financial year of 2021-22,” the finance chief said in his Sunday blog.
The government expected there would be a budget deficit of HK$101.6 billion ($13 billion) for financial year 2021-22 when it announced the budget in February last year.
Excluding the write-back of debt issuances, the Housing Reserve and investment returns from the Future Fund, the government budget deficit could have been as high as HK$180 billion.
The city’s export sector has performed remarkably. The unemployment rate has slipped to 4.1 percent. With the local COVID-19 situation in check, domestic consumption gained momentum due to the electronic consumption voucher scheme, and private investments have also expanded remarkably.
In Chan’s opinion, these factors support the view that the city’s economy should register a growth rate of 6.4 percent for 2021.
The government will announce the growth rate of the Hong Kong economy for 2021 when delivering the Budget 2022-23 next month.
While pledging to utilize public resources to render financial assistance to Hong Kong residents and small and medium enterprises, the finance chief also stressed the need for a prudent approach to managing public finances.
“Amid the complex international political and economic situation, we should maintain our financial arsenal to ensure Hong Kong’s financial system will be stable, and to accommodate those known and unknown scenarios and needs,” Chan said.
“As a small and open economy, Hong Kong should guard the potential risks and impacts of the rising inflation in overseas economies, including the risk of an interest rate hike, the reversal of capital flows and asset price volatility,” the finance chief cautioned.
Looking ahead, the greatest variable and potential hindrances to Hong Kong’s economic growth are the changes in the pandemic situation, Chan said.
The government will accommodate the anti-pandemic work so as to create a favorable scenario for resuming quarantine-free travel with the mainland. Only in such a situation can the Hong Kong economy rebound to its furthest extent.