A general view shows commercial buildings in Hong Kong on Nov 19, 2020. (ANTHONY WALLACE / AFP)
HONG KONG - The International Monetary Fund has reaffirmed Hong Kong's position as a major international financial center, commending the city’s strong economic recovery and the government's efforts to safeguard financial stability.
In a concluding statement published Thursday following a mission to the Hong Kong Special Administrative Region, the IMF recognized that the city's financial sector, underpinned by robust regulatory and supervisory frameworks, has continued to expand even during the COVID-19 pandemic.
The IMF said Hong Kong’s well-functioning Linked Exchange Rate System remains key to safeguarding economic and financial stability. Meanwhile, the city's macroprudential policies and strong institutional frameworks have also provided it with important buffers to cope with economic shocks.
The IMF added that there is upside potential for Hong Kong's economic growth due to factors including a faster-than-expected global recovery and the development of the Guangdong-Hong Kong-Macao Greater Bay Area
It noted that Hong Kong's economy has recovered strongly with the support of swift and bold policy responses. It projected a growth of 6.4 percent and 3 percent in the city's real gross domestic product in 2021 and 2022, respectively.
The IMF added that there is upside potential for Hong Kong's economic growth due to factors including a faster-than-expected global recovery and the development of the Guangdong-Hong Kong-Macao Greater Bay Area.
Noting that the large fiscal stimulus has helped mitigate the impact of economic shocks on Hong Kong, the IMF recommended that Hong Kong's fiscal policy return to a balanced budget in a gradual manner. The financial hub should also focus on more targeted support measures to address structural challenges and support balanced and inclusive growth.
At the same time, the IMF recognized the government's ongoing efforts to enhance the green and sustainable finance ecosystem, such as adopting internationally accepted standards and promoting eligible green and sustainable financing.
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It also noted that capitalizing on opportunities from the mainland and strengthening regional and international collaboration on the green development front are conducive to consolidating Hong Kong's position as a major international financial center.
Hong Kong’s Financial Secretary Paul Chan Mo-po welcomed the mission's recognition of the city's strong economic recovery supported by the government's swift and bold policy responses, including the Consumption Voucher Scheme and various anti-epidemic support measures.
“I am glad that the mission commends our resilient financial system underpinned by robust regulatory and supervisory frameworks and ample buffers built over the years,” Chan said in a statement.
The government will stay vigilant and monitor the economic situation closely in a bid to maintain financial stability and foster balanced, inclusive and sustainable growth, he added.
Hong Kong Monetary Authority Chief Executive Eddie Yue Wai-man also welcomed the IMF’s positive assessment of Hong Kong's regulatory and supervisory framework that it has kept pace with market developments and technological advancements.
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