Deficit soars to $183b amid virus handouts

Business | Winnie Lee 1 Sep 2020

The Hong Kong government recorded a cumulative deficit of HK$183.7 billion for the four months ended July, having warned earlier that fiscal reserves may stand at around the level last seen in 2003 after the SARS epidemic.

Expenditure for the period was HK$289.8 billion while revenues were HK$106.1 billion.

The government said there was a deficit mainly because some major types of revenue, including salaries and profits taxes, are mostly received at the end of a financial year. It was also due to payments for the Cash Payout Scheme and various measures under the anti-epidemic fund. Fiscal reserves stood at HK$976.6 billion at the end of July. The fiscal reserves in the post-SARS period were equivalent to around 12 months of government expenditures.

Hong Kong's total deposits with authorized institutions grew by 2.7 percent in July, affected by initial public offering activities.

Of this amount, Hong Kong dollar deposits and overall foreign currency deposits rose by 4.2 percent and 1.1 percent respectively, the Hong Kong Monetary Authority said.

Renminbi deposits in Hong Kong were up 2.9 percent to 658.3 billion yuan (HK$745.5 billion).

Total loans and advances increased by 1.7 percent in July. Of this amount, loans for use in Hong Kong, including trade finance, rose by 2.4 percent, and loans for use outside Hong Kong edged up by 0.1 percent.

The Hong Kong dollar loan-to-deposit ratio decreased to 85 percent from 86.4 percent in June as Hong Kong dollar deposits increased at a faster pace than Hong Kong dollar loans.

The total assets of the Exchange Fund shrank by HK$39.1 billion to HK$4.16 trillion as of July 31. Hong Kong dollar assets decreased by HK$70 billion, while foreign currency assets increased by HK$30.9 billion.

In other news, the HKMA sold HK$1.16 billion as the Hong Kong dollar strengthened yesterday amid IPO activities.

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