Hong Kong flags handouts to help restoration from COVID shock

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Government says it should subject vouchers price 5,000 Hong Kong {dollars} to all adults this 12 months to assist financial restoration.

Hong Kong will give extra handouts to shoppers to help the town’s restoration from a protracted financial downturn induced by COVID-19 restrictions, Financial Secretary Paul Chan has introduced within the metropolis’s newest funds.

The world monetary hub will subject vouchers price 5,000 Hong Kong {dollars} ($637) per individual to all adults this 12 months, half the quantity issued in 2022 as Chan makes an attempt to dial down fiscal spending with a watch on the town’s coffers.

Chan advised legislators the town was initially of an financial restoration, not shackled by stringent COVID measures that remoted it from the remainder of the world.

“I believe that Hong Kong’s economy will visibly recover this year, and I remain positive,” Chan mentioned on Wednesday.

“However, the economic recovery is still in its initial stage, and there is a need for our people and businesses to regain vigour.”

Chan additionally flagged a discount in salaries tax by 100 %, capped at 6,000 Hong Kong {dollars} ($765), decrease than the cap set for the earlier funds. He mentioned the federal government will even introduce a brand new capital funding entrant scheme to draw expertise.

Hong Kong counts on elevated cross-border enterprise with mainland China, which has additionally given up implementing COVID rules.

The metropolis had spent greater than 600 billion Hong Kong {dollars} ($76.44bn) on varied pandemic reduction programmes for the previous three years, forcing it to run uncommon funds deficits.

Hong Kong normally runs balanced budgets or surpluses, since its pegged foreign money system commits it to fiscal prudence, however nonetheless has ample reserves.

Currently at about 800 billion Hong Kong {dollars} ($101.93bn), they cowl the administration’s spending wants for 12 months.

The metropolis’s economic system is predicted to develop 3.5-5.5 % this 12 months after contracting 3.5 % in 2022, Chan mentioned.

Analysts say its publicity to a weakening world economic system and the necessity to sustain with US rate of interest hikes to keep up the native foreign money’s peg to the greenback nonetheless generate excessive ranges of uncertainty in regards to the depth of Hong Kong’s restoration.