Great expectations: all eyes on HK budget unveiling but will it include a cash handout?

27-Feb-2020 Intellasia | South China Morning Post | 6:02 AM Print This Post

Hong Kong’s finance minister will face sky-high expectations as he delivers his fourth financial blueprint on Wednesday morning, including hopes for a cash handout for all permanent residents.

But Ronny Tong Ka-wah, a member of Chief Executive Carrie Lam Cheng Yuet-ngor’s cabinet, cautioned against hoping for major surprises, telling the Post Financial Secretary Paul Chan Mo-po had “no tricks up his sleeves” given the five rounds of government relief measures already announced since summer.

A source familiar with the government’s position said a cash handout of some sort was inevitable given mounting pressure from all sides, though details were still being hammered out by Chan’s inner circle early this week.

“The financial secretary is trying to spend the money efficiently to retain jobs amid the economic woes,” another government source said, adding help would be directed towards middle class taxpayers, who face a growing risk of losing their jobs or seeing their pay cut.

Chan is also expected to reveal the extent of the city’s first deficit in 15 years, amid the economic battering of the US-China trade war, anti-government protests and the coronavirus outbreak.

The finance secretary warned last month that the deficit for the current financial year could be as much as 3 per cent of gross domestic product, or about HK$80 billion (US$10.3 billion).

Hong Kong’s biggest budget deficit ever was HK$63.3 billion in 2001-02. That was followed by a deficit of HK$61.7 billion in 2002-03 and HK$40.1 billion in 2003-04.

Delivering his third budget last February, Chan was optimistic that gross domestic product would grow by 2-3 per cent, a prediction subsequently revised to a contraction of anywhere from 0 to 1 per cent.

Finance chief issues warns of ‘finite’ resources amid calls for cash handout

Ultimately, months-long unrest sparked by the anti-extradition bill protests saw the preliminary GDP contract by 1.2 per cent last year, the first decline since 2009.

Chan is expected to brief the Executive Council on the contents of his budget speech at a special 9am meeting on Wednesday.

He will then deliver his budget in person at the Legislative Council at 11am despite disruptions to government services caused by the coronavirus outbreak.

In recent weeks, parties from across the political spectrum have called for a cash handout, with some urging the government to grant HK$10,000 to each permanent Hong Kong resident.

While Chan wrote in his blog on Sunday that not all wishes would be granted in his upcoming budget, Tong said the finance secretary should spare no effort in jump-starting ailing sectors like tourism and getting the city back to a normal economic cycle.

Paul Chan doesn’t have any tricks up his sleeves following the announcement of five rounds of massive relief measures

Ronny Tong, executive council member

Even so, the Exco member noted the current administration’s practice is to announce policy initiatives or relief measures when they are ready, rather than waiting for a budget address to reveal them.

“Paul Chan doesn’t have any tricks up his sleeves following the announcement of five rounds of massive relief measures,” Tong said, adding he was personally opposed to the idea of indiscriminate cash handouts.

“The financial secretary should make the most of cash in his hands by focusing on helping those in need, particularly the underprivileged,” he said.

Two weeks ago, Chief Executive Carrie Lam Cheng Yuet-ngor unveiled a HK$25 billion coronavirus relief package for business and vulnerable groups. The scheme was beefed up to HK$30 billion last week.

More than half of the funding HK$16.9 billion will go towards one-off cash injections to retailers, food and drink service providers, transport companies, students, the arts and culture sector, guest houses, and travel agents.

In its report on Hong Kong’s financial position, released on December 30, the International Monetary Fund noted the city was well placed to address both cyclical and structural challenges given its significant buffers including large cash reserves despite weakened economic activity and mounting headwinds on the growth outlook.


Category: Hong Kong

Print This Post