Hong Kong Financial Secretary Paul Chan announced a "massive" HK$120 billion ($15.4 billion) program of counter-cyclical measures for the fiscal year starting April 1 to combat the effects of the COVID-19 outbreak on the special administrative region.
"Entering 2020, the rapid spread of the novel coronavirus has dealt a severe blow to economic activities and sentiment in Hong Kong," with fiscal stimulus the key to helping the public "ride out the difficult times," Mr. Chan said Wednesday in his budget speech for the coming year.
Roughly three-fifths of that stimulus war chest, or HK$71 billion, will go toward a disbursement of HK$10,000 apiece to Hong Kong's 7 million permanent residents 18 or older. The payout is aimed at boosting local consumption and alleviating the financial burdens now falling on Hong Kong's population, Mr. Chan said.
Other measures to help the special administrative region's businesses and citizens cope with what Mr. Chan termed the "enormous challenges" facing Hong Kong's economy this year include tax breaks, guaranteed loans for small and midsize enterprises and rent subsidies.
With the COVID-19 virus hitting a service sector already reeling from six months of street protests that began when the territory's government tabled a bill that would have allowed for extradition to mainland China, Mr. Chan said Hong Kong would run its first budget deficit in 15 years at HK$37.8 billion, or 1.3% of gross domestic product, for the current fiscal year ending March 31.
With the HK$71 billion cash payout and other measures, the deficit for the coming fiscal year will grow to HK$139.1 billion or 4.8% of GDP, he predicted, adding that the government expects to run deficits for the next five years.
Hong Kong's economy, meanwhile, entered recession in the third quarter of 2019 and contracted by 1.2% for the calendar year — the first annual decline since the global financial crisis, Mr. Chan said.
The budget also included steps to bolster Hong Kong's money management industry.
Mr. Chan said the government would waive the stamp duty on stock transfers paid by ETF market makers in the course of creating and redeeming ETF units listed in Hong Kong, to reduce transaction costs and spur the development of the ETF market in Hong Kong.
Noting the success of the inaugural $1 billion green bond brought out last year as part of the Hong Kong government's green bond program, Mr Chan said, "We plan to issue green bonds totaling $66 billion within the next five years."
Likewise, Mr. Chan said the government is planning to provide tax concessions for carried interest issued by private equity funds operating in Hong Kong to attract more PE funds to domicile and operate there.