Hong Kong — Hong Kong CEO Carrie Lam has announced a fresh stimulus package worth about HK$137.5bn ($17.7bn) to support the city’s deteriorating economy amid the coronavirus pandemic.
The spending package will include an HK$80bn job security programme to subsidise 50% of wages for affected workers for six months, Lam said in a press conference on Wednesday evening. Lam and other key officials will reduce their salaries 10% for one year.
“As we are facing an unprecedented challenge, the government has to respond in an unprecedented manner,” she said.
The Hong Kong government has been under pressure to add more support for an economy that had already slid into recession following months of political unrest and now faces shutdowns to curb the Covid-19 pandemic.
In February, the government announced a HK$30bn anti-epidemic fund and a HK$120bn relief package in the annual budget centred on a HK$10,000 handout to all permanent residents age 18 and above.
“This will be a step up by the government to help small and medium enterprises survive, and hopefully prevent a mass wave of unemployment and support low-income groups,” said Tommy Wu, senior economist at Oxford Economics in Hong Kong. “It looks like this is sizeable enough to cover many workers who have been affected by the virus.”
The additional spending announced on Wednesday almost doubles Hong Kong’s projected budget deficit for the 2020/2021 fiscal year to HK$276.6bn from an earlier estimate of HK$139.1bn, Lam said. This accounts for about 9.5% of GDP.
Government reserves are expected to drop to as low as HK$800bn as a result of the relief measures, financial secretary Paul Chan said at the press conference. That is equivalent to about 14 to 15 months of government spending, he said, adding that the government’s finances are still sound and there is no immediate plan to issue debt.
Bloomberg
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