What you should know about Hong Kong's fiscal stance for 2014-2015

The one-off fiscal stimulus is clue.

Compared to an expansionary budget in 2013-14, the fiscal stance for 2014-15 should be somewhat neutral to negative for the economy, as the government starts to rein in one-off fiscal stimulus.

According to a research report from UBS, this is in line with data showing that the fiscal surplus is estimated to have narrowed to HK$12bn in FY2013-14.

This is 0.6% of GDP, which is sharply down from 3.2% in FY2012-13.

Hong Kong remains one of the most fiscally conservative economies in the world, which is reflected by the fact that government debt hovers around 1% of GDP.

The report noted that in order for the currency peg to be credible, Hong Kong keeps fiscal deficits in check and that UBS see no foreseeable problems in this area.

Consequently, UBS said, fiscal policy is not a major driver in the economy.