Hong Kong flags handouts to support recovery from COVID shock

Authorities says it'll situation vouchers value 5,000 Hong Kong dollars to all adults this yr to assist financial restoration.

Hong Kong was remoted from the remainder of the world for greater than two and a half years [File: Tyrone Siu/Retuers]

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

The worldwide monetary hub will situation vouchers value 5,000 Hong Kong dollars ($637) per particular person to all adults this yr, 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 informed legislators the town was at the start of an financial restoration, now not shackled by stringent COVID measures that remoted it from the remainder of the world.

“I consider that Hong Kong’s economic system will visibly recuperate this yr, and I stay constructive,” Chan stated on Wednesday.

“Nonetheless, the financial restoration continues to be in its preliminary stage, and there's a want for our individuals and companies to regain vigour.”

Chan additionally flagged a discount in salaries tax by one hundred pc, capped at 6,000 Hong Kong dollars ($765), decrease than the cap set for the earlier funds. He stated 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 imposing COVID guidelines.

Town 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 forex system commits it to fiscal prudence, however nonetheless has ample reserves.

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

Town’s economic system is predicted to develop 3.5-5.5 p.c this yr after contracting 3.5 p.c in 2022, Chan stated.

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 forex’s peg to the greenback nonetheless generate excessive ranges of uncertainty concerning the depth of Hong Kong’s restoration.