The 2022/23 finances proposals have been introduced as tons of of bars, eating places and small retailers warned they have been months away from closure, and purchasing malls have been abandoned whereas the town endured its worst Covid-19 outbreak to date.
“Hong Kong is presently experiencing its hardest time within the combat towards the epidemic, and we face monumental challenges,” Chan instructed legislators by way of videoconference on Wednesday.
Complete spending in 2022/23 was estimated at HK$807.3 billion ($103.47 billion) and revenues have been estimated at HK$715.9 billion, returning Hong Kong’s finances to a deficit after a HK$18.9 billion surplus in 2021/22.
Hong Kong normally runs balanced budgets or surpluses, since its pegged foreign money system commits it to fiscal prudence, however nonetheless has ample reserves.
Fiscal reserves are estimated at HK$940 billion on the finish of the federal government’s present time period in June, and are anticipated to develop above HK$1 trillion within the coming 5 years.
Chan mentioned “countercyclical measures” to help the economic system totalled greater than HK$170 billion, with spending on anti-epidemic measures put at greater than HK$54 billion.
The worldwide monetary hub has doubled down on its “dynamic zero Covid” technique, which goals to eradicate all outbreaks, following mainland China’s lead at the same time as the remainder of the world adjusts in the direction of “dwelling with the virus.”
Given the town is dealing with 1000’s of infections a day and the numbers are rising, some analysts predict no less than one or two quarters of financial contraction after recovering final yr from the town’s most extended recession in 2019-2020.
Bars, gyms, magnificence parlours and 12 different varieties of venues are closed, whereas eating places can not function past 6.00 pm. Other than grocery shops, most retailers are abandoned as residents are again working from residence. The border is just about shut with the finance sector complaining this has prompted an exodus of expertise and made working a regional hub out of Hong Kong troublesome.
The restrictions will final till no less than April 20.
The finances measures embrace a one hundred pc discount in salaries tax, capped at HK$10,000, handouts of HK$10,000 consumption vouchers, monetary help for the unemployed, and subsidies for instantly impacted companies.
Residents will get tax deductions associated to hire funds, in addition to subsidies for transport and utilities.
A one hundred pc discount in income tax capped at HK$10,000 is predicted to learn 151,000 companies, Chan mentioned. As well as, the federal government will assist corporations with mortgage ensures, export financing, and debt compensation holidays.
New laws will likely be launched to forestall landlords from terminating rents of struggling companies for as much as six months.
Funds price HK$1.26 billion will likely be given to companies within the tourism business, reeling from two years of inactivity with no near-term prospects of restoration.
Dangle Seng Financial institution Chief Economist Thomas Shik mentioned the measures will ease strain on the economic system in coming months however he would possibly nonetheless minimize his 3.3 % progress forecast for 2022.
“We’re reviewing the state of affairs .. given the influence of Omicron in addition to the uncertainty from exterior elements,” Shik mentioned.
The “anti-epidemic” measures embrace HK$22 billion to spice up Covid-19 testing capability, HK$6 billion for vaccines, and HK$12 billion to construct extra well being amenities, amongst others.
Hong Kong’s economic system is predicted to develop 2.0 % to three.5 % this yr after increasing 6.4 % in 2021, Chan mentioned, including the forecast takes into consideration a restoration within the second a part of the yr as soon as the epidemic is introduced underneath management.
“The profitable management of the epidemic is the important thing to safeguarding our economic system and folks’s livelihood,” Chan mentioned.