Hong Kong set for fiscal deficit that’s double estimate: financial secretary

HONG Kong is headed for a financial deficit almost double the budget estimate as the sluggish economy shrinks revenue and the pandemic boosts government spending, said Financial Secretary Paul Chan.

The city may report a fiscal deficit of more than HK$100 billion (S$17.9 billion) for the 2022-23 year, compared with the HK$56.3 billion estimated by the government earlier this year, the financial secretary wrote in his blog on Sunday (Sep 18).

Profit and salaries tax revenue will be less than forecast at the beginning of the year amid weaker exports, lower private consumption and investment, Chan said. Both small and medium-sized businesses as well as employees are still under pressure amid the impact of the pandemic, he said.

The deficit takes into account the government’s sale of HK$35 billion of green bonds this year, he said. Hong Kong has said it will further extend the rental or fee concessions for government properties and short-term tenancies and waivers to ease the operating pressure of businesses as the pandemic continues to affect economic activities.

Prospects for the economy remain challenging, Chan said. While financial-aid measures including the government-issued consumer coupons will help boost growth, the key for improvement is that the epidemic is better controlled and cross-border travel is restored, he said.

The city’s unemployment rate improved this year from a high of 5.4 per cent in the February-to-April period to 4.3 per cent from May till July, and should decline further when the latest jobless data is released this week.

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The financial secretary said he expected that the second phase of consumer coupons to be issued from Oct 1 will inject more than HK$15 billion into the consumer market. BLOOMBERG