Hong Kong Deploys $15 Billion To Prop up Its Economy

Hong Kong on Wednesday unveiled a stimulus package in which over US$15.48 billion will be used to implement counter-cyclical measures to overcome the economic effects of the pandemic.

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“It is a critical time as Hong Kong is confronted with the dual challenges from COVID-19 and financial distress,” said Carrie Lam, the Chief Executive of the Hong Kong Special Administrative Region (HKSAR).

The stimulus package includes reduction of taxes and fees worth US$1.2 billion for businesses, an extended financing guarantee scheme for small and medium-sized enterprises, a job training program to benefit 20,000 people, and the creation of 30,000 temporary jobs.

Individuals will have tax breaks, subsidies on power charges, social security allowance, favorable personal loans, and US$645 of electronic consumption vouchers.

The government spending in education, social welfare, and healthcare will come to US$39 billion, accounting for 58 percent of the total estimated recurrent expenditure and representing an increase of 45 percent from four years ago.

The 2021-2022 budget came after Hong Kong's economy slipped 6.1 percent last year, with the latest jobless rate spiking to 7 percent.

 As the COVID-19  epidemic has shown signs of abating and the COVID-19 vaccines began to be administered, authorities forecast that Hong Kong will resume positive growth in 2021, with an increase of 3.5 percent to 5.5 percent in real terms.

Nevertheless, Hong Kong is expected to see a deficit of US$13 billion for the FY2021, equivalent to 3.6 percent of its gross domestic product (GDP).