Former finance minister Henry Tan Ying-yen said Hong Kong’s plan to issue bonds to deal with its dire budget deficit was not “outrageous” but rather a legitimate short-term move to improve capital flows. He said it was a medium-term solution.
Mr Tang said on Tuesday that Finance Secretary Paul Chan Mopo had announced plans for the budget after his successor, Mr John Tsang Chun Wah, warned that the measures could affect the city’s credit rating. defended the government’s plan announced in
According to Chan’s budget speech last week, Hong Kong planned to issue HK$120 billion (US$15.3 billion) in silver, green and infrastructure bonds to cover the government’s current costs. He remained confident the city would break even within three years.
Tsang, who was the longest-serving finance secretary from 2007 to 2017, previously said in social media posts that the city needs to look beyond bond issuance to finance government spending. He also claimed that the government has “undoubtedly entered an era of structural deficits”.
Speaking in Beijing as a member of the Standing Committee of the Chinese People’s Political Consultative Conference (CPPCC), Mr. Tang, who served as finance secretary before Mr. Tsang, said the plan was “completely legitimate” as long as there was market demand. Ta.
“Bond issuance for the purpose of maintaining government operations is not a huge amount,” Tan said.
“It is acceptable if it is used to strengthen capital flows and raise funds in the short and medium term in the event of a disruption of the capital chain.”
Funding crisis at Hong Kong’s West Kowloon Arts Center “Fear of suspension of event transactions”
Funding crisis at Hong Kong’s West Kowloon Arts Center “Fear of suspension of event transactions”
Hong Kong’s budget deficit is expected to balloon to HK$101.6 billion in the current fiscal year, which ends in March, nearly double the government’s forecast last year. Mr Chan said more borrowing would allow the government to maintain cash flow to fund major projects such as in the northern metropolis.
Mr. Tang, who served as finance secretary from 2003 to 2007, dodged a question about whether Hong Kong was already in a structural deficit, as Mr. Tsang claimed.
But he stressed that Chan has an obligation to abide by the principles set out in the city’s mini-constitution, the Basic Law, that the government must avoid deficits and keep expenditures within revenue.
“If we can speak frankly to the people, [about the dire financial situation]they can feel your respect and understand the rationale for the measures amidst hardship,” he said, referring to the city’s real estate downturn and soaring recurrent expenditures.
Tang said that when he proposed a HK$20 billion bond issue in 2004, bankers described it as a “museum item” because it was a rarely used tool to solve deficit problems at the time. Told.
In 2005, the city posted its first budget surplus in five years, following a policy of attracting tourists from mainland China and starting a renminbi business in the same year.
Tang argued that Hong Kong is on the right track to revive its economy by finding new drivers in technology and deepening cross-border integration.
Mr Tsang’s comments on the budget measures sparked a heated debate on social media. He said that in a high interest rate environment, government bonds may not be as attractive to buyers as putting their money in a bank for a higher rate of return.
30,000 yuan tax free?Hong Kong CPPCC members seek new cap on visitors from the mainland
30,000 yuan tax free?Hong Kong CPPCC members seek new cap on visitors from the mainland
He also said the city would eventually have to pay interest on its debt, which would not only affect the city’s credit rating but also force future generations to pay higher taxes and fewer public services. I was worried that this might be the case.
On Monday, Tang also expressed support for the city’s upcoming national security law, known as Article 23 of the city’s mini-constitution.
“Without stability, it’s difficult to talk about economic development and improving livelihoods,” he said.
He added that countries, including Singapore, are strengthening their national security legislation, and argued that the proposed legislation should be effectively used to gain investor confidence.
