Take a hint: no handouts in budgetTop News | Charlotte Luo 9 Jan 2020
Financial Secretary Paul Chan Mo-po has hinted there will be no cash handouts in his upcoming budget, saying it could lead to a deficit of up to HK$100 billion.
Chan said the social unrest and violence in the past seven months have hit the economy hard - especially tourism, retail and dining - severely damaging Hong Kong's international image.
The economy is estimated to have contracted 1.3 percent in 2019, the first negative growth in a decade, he said.
The unemployment rate went up 3.2 percent in September to November, as 125,400 people were left jobless.
"Some people told us society and people are unhappy," he said. "Is it possible to hand out cash to everyone to make them happy?"
Chan said some have proposed cash handouts of HK$10,000 to each resident, which would cost the government up to HK$70 billion, he said.
"Adding to the existing deficit, it is easy to exceed HK$100 billion. Is that acceptable to everyone?" Chan asked.
"We must also understand that many international rating agencies and think tanks are watching us. If there is a negative impact on the rating, it will also affect corporate lending, so we are very cautious in this regard."
He estimated this fiscal year's deficit of less than HK$80 billion will not exceed 3 percent of GDP.
On a proposal to distribute consumer vouchers, Chan said administrative and anti-counterfeiting issues have to be considered.
Taiwan and Japan introduced consumer vouchers in the past, but the economic stimulus effects were not satisfactory, he said.
Hong Kong's economy is in a difficult situation and still faces huge challenges this year, Chan said.
"Stopping violence and restoring social order as soon as possible is the key to regaining the momentum of economic growth and restarting Hong Kong," he said.
"If the social unrest and violence continue, it will be more difficult for the inbound tourism industry, personal consumption and investment to recover, and it will further weaken the confidence of the international community and investors in Hong Kong, and make more workers lose their jobs." He added the government will launch new relief measures to boost the economy and support enterprises in due course, which is one of the main themes for the budget to be delivered on February 26.
Meanwhile, consumer confidence in Hong Kong in the fourth quarter of 2019 was the second-lowest since the index was launched 11 years ago.
The Consumer Confidence Index in Hong Kong was 68.7 in a 200-scale, down 14.9 percent year on year, but up 30.1 percent quarter on quarter.
"All the sub-indexes are measured lower than 85, showing that Hong Kong consumers lack confidence," the survey stated.
"The situation may be caused by instability in Hong Kong's political environment over the past months."
The index uses a scale of zero to 200, with zero representing no confidence and 200 representing complete confidence.
City University held telephone interviews with 1,002 residents aged 18 or above randomly selected for the index from December 10 to December 31.