Deficit certain, sweeteners unlikely in budget - RTHK
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Deficit certain, sweeteners unlikely in budget

2020-02-26 HKT 06:07
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  • Paul Chan will deliver his budget in Legco on Wednesday. Photo: AFP
    Paul Chan will deliver his budget in Legco on Wednesday. Photo: AFP
Financial Secretary Paul Chan will deliver his latest budget at Legco on Wednesday, where he's expected to announce the SAR's first fiscal deficit in 15 years.

Chan has warned that the shortfall – driven by the fallout from the coronavirus epidemic, and coming on the heels of the months-long anti-government protest movement – is likely to become the largest ever.

And with the financial secretary's earlier remarks that the deficit wouldn't top three percent of GDP, that would put it in the region of HK$60 billion to HK$80 billion.

That's slightly more pessimistic than what experts are forecasting for this year. The "Big Four" accounting firms are predicting deficits between HK$38 billion and HK$70 billion – with reduced tax and land-sales revenues dragging income down, while tens of billions of dollars in relief measures drives expenditure up.

In any case, this will be the city's first deficit in 15 years, and a far cry from the nearly HK$20-billion surplus that was predicted just 12 months ago.

More than six months of sometimes-violent anti-government protests coincided with global economic uncertainty – and all that was followed by the coronavirus epidemic, which has devastated the retail, tourism and catering industries.

Despite what could be a record-breaking deficit, analysts say the SAR remains in a healthy position because of its huge reserves.

There have been vocal and repeated calls from across the political spectrum to dip into those reserves, and to augment the government's HK$30 billion coronavirus-relief package with a HK$10 thousand dollar cash handout to help local residents weather the current economic storm.

The anti-epidemic fund already provides support for medical workers, retailers, restaurants, as well as students.

But there have also been calls for tax breaks, rent waivers, and funding to support people laid off because of the epidemic.

However, in a blog post at the weekend ahead of today's budget, the finance minister appeared to be lowering expectations.

He says because of limited government resources, his budget can't satisfy everybody – and priority should be given to supporting businesses and protecting jobs.