The minister for financial services and the treasury, Christopher Hui, said on Thursday that credit agencies have given officials positive feedback regarding the government's plans to issue more bonds and use the Exchange Fund for infrastructure projects.

In the budget, the government raised the ceiling for bond issuance from HK$700 billion to HK$900 billion over the next five fiscal years.

And in a move not made in more than four decades, the administration also suggested taking HK$150 billion out of the fund over two years to spend on infrastructure projects like the Northern Metropolis.

Hui said officials have been explaining the moves to credit agencies and economists since the budget was unveiled, and they have generally approved of the plans.

"People [from credit agencies] generally see us in a very prudent and sustainable manner," he said at a press conference on the budget.

"We are only channelling the bond issuance proceeds to the works project. And all these, I would say, differentiate us from many other economies where they are facing lots of fiscal issues."

The minister said the government's debt level is very much controllable and manageable compared with other advanced economies, and there have been major improvements in Hong Kong's overall fiscal position.

Hui stressed that the proposals will be subject to approval from the legislature, so there will be systemic oversight.

On what scenarios would trigger a similar move to use money from the fund in future, Hui stressed the transfer will not be a regular one.

Five years ago, the minister rejected a lawmaker's proposal to use Exchange Fund capital to boost the economy during Covid.

Hui said the logic and rationale now remains the same, because his rejection then was based on the need to safeguard Hong Kong's financial and monetary systems.

He stressed that the current plans to use the fund are based on the premise that its functions will not be compromised, and that the money is not for recurrent expenditure, but a one-off investment in works projects.



Edited by Thomas McAlinden