Hong Kong Economic and Trade Office, USA
Hong Kong
News Release



Financial Secretary Unveils 2020-21 Budget

 



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Daniel McAtee in Washington, D.C.: (202) 238 6360
Melissa Ng in New York City: (212) 752 3320
Wing Yan Tong in San Francisco: (415) 835 9315

 




February 26, 2020 - In delivering his 2020-21 Budget today, Financial Secretary Paul Chan acknowledged that the budget was prepared against the backdrop of looming uncertainties in the global economy, the aftermath of local social incidents and the outbreak of novel coronavirus disease, COVID-19. Mr. Chan said that the most pressing tasks for the government are to control the epidemic and stabilize the economy.

Mr. Chan said that Hong Kong’s economy contracted by 1.2 percent in 2019 – the first annual decline since 2009. He forecast full-year growth of between -1.5 percent and 0.5 percent in 2020.

Amidst the epidemic, the government is committed to providing sufficient financial support for the Hospital Authority and the Department of Health for anti-epidemic efforts. Mr. Chan announced that the government would provide recurrent funding of US$9.6 billion to the Hospital Authority in 2020-21, an increase of 35 percent from 2017-18. The proposals complement the initiatives set out under the recently established US$3.8 billion Anti-epidemic Fund to enhance the capability of Hong Kong to combat the COVID-19 epidemic and to provide assistance to affected enterprises and members of the public.

On the economy, he presented a range of measures to strengthen Hong Kong’s pillar industries while identifying new growth engines among emerging sectors. “This will not only broaden the foundation of our economy, but also provide diversified and quality employment opportunities for young people,” Mr. Chan said.

In light of the economic challenges, the Financial Secretary announced the implementation of robust counter-cyclical measures involving US$15.4 billion.

Mr. Chan set out a series of proposals to fortify the city’s competitiveness as an international financial center, including issuing green bonds totaling over US$8 billion over the next five years.

He highlighted the importance of promoting innovation and technology as a driving force for future economic development. To this end, he announced a series of proposals, including financing the expansion of the Hong Kong Science Park, exploring the development of a new research cluster at Science Park, as well as encouraging the wider adoption of technology applications among companies and particularly the logistics industry.

Additional support measures were earmarked to revive the battered tourism industry once the epidemic is over. In addition, funding would be allocated to assist Hong Kong enterprises in exploring new market opportunities.

Mr. Chan unveiled various proposals to foster talent, particularly for research and development in the technology sector and STEM programs.

To stimulate the economy by boosting local consumption and relieve the financial burden on the community, Mr. Chan announced a cash payout of US$1,282 to Hong Kong permanent residents aged 18 or above. The measure, which involves an expenditure of about US$9 billion, is expected to benefit about 7 million people.

Mr. Chan also proposed a one-off reduction of profits tax, salaries tax and tax under personal assessment for the year of assessment 2019-20 by 100 percent, subject to a ceiling. Additional relief measures include waiving certain rates and fees, as well as providing extra allowances and financial support to those in need.

Mr. Chan said that the various measures would help create new areas of economic growth, with a view to increasing revenue, promoting social development, coping with the challenges arising from an ageing population and providing more quality employment opportunities.

Mr. Chan forecast a budget deficit of about US$4.8 billion for the 2019-20 financial year, rising to about US$17.8 billion in 2020-21. Fiscal reserves are expected to be US$141 billion by March 31, 2020.

“Although a record high deficit is envisaged in next year’s budget, I believe that only with such a budget can we help our community and local enterprises ride out their difficulties,” Mr. Chan said.

Budget 2020-21

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