HONG KONG - Hong Kong is likely to see its highest ever budget deficit in the next fiscal year as it deals with the impact of the outbreak of novel coronavirus pneumonia as well as the social unrest in the past months, the city's financial chief said on Sunday.
In addition to the coronavirus outbreak, the local community has yet to fully recover from last year's social events. As a result, it is necessary to remain cautious on the short-term economic outlook and fiscal deficit is likely to remain for a period of time, Financial Secretary Paul Chan Mo-po said in an article published on his official blog.
Financial Secretary Paul Chan said that in addition to the coronavirus outbreak, the local community has yet to fully recover from last year's social events, hence it is necessary to remain cautious on the short-term economic outlook
The projected fiscal deficit for the 2020-2021 fiscal year is likely to be the highest ever, not only because of the government's recent countercyclical relief measures, but also due to the continued remarkable increase in recurrent spending over the past decade and the significant reduction in government revenues from taxes and land as a result of weakening economy, he said.
READ MORE: HK$47.5b deficit forecast for HK
Chief Executive Carrie Lam Cheng Yuet-ngor announced on Friday a package of relief measures for businesses and residents suffering from the outbreak and a proposal for allocating 25 billion Hong Kong dollars (US$3.22 billion) for the fight against the epidemic.
Chan emphasized that the HK government's current financial reserves allow it to introduce the countercyclical measures to stabilize employment and support the economy.
However, in order to ensure the stability of public finance, the government will pay more attention to financial sustainability in the future when considering new expenditures, especially recurrent expenditures, he said.
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