Hong Kong runs fiscal deficit for first time in 15 years
The government expects the deficit to widen to 4.8% of the GDP for next year.
Hong Kong recorded a deficit of $37.8b for 2019-20 or about 1.3% of the city’s gross domestic product (GDP), finance secretary Paul Chan revealed in his budget speech.
This is the first time that Hong Kong ran a fiscal deficit in 15 years.
Chan said that the trade tensions, coupled with the protests that started last June, significantly dampened economic momentum. In the past months the government announced measures that cost about $30b to help boost the economy amidst these times—which, in turn, drove the city to a fiscal deficit.
“In the past six months, I have announced four rounds of relief measures costing over $30b. These measures, together with the $30b Anti-epidemic Fund established in response to the recent novel coronavirus outbreak, resulted in a deficit of about $37.8b for 2019-20, which is about 1.3% of GDP,” stated Chan.
Noting the government’s countercyclical fiscal measures and continued recurrent expenditure, Chan forecasts lower tax and land revenues, and in turn is expecting the fiscal deficit for 2020-21 to soar to $138.1b, or 4.8% of the GDP.