The Hong Kong government’s decision to go into the red this year – and for the next five – has sparked calls from financial experts for it to come up with a more comprehensive strategy to seek other revenue streams and identify new areas of economic growth, reported the South China Morning Post.
Economists in the government’s Working Group on Long-Term Fiscal Planning warned six years ago that there could be a structural deficit by 2021, as increases in expenditure exceeded revenue growth as a result of the ageing population.
But it was the double hit of the US-China trade war and the coronavirus epidemic that resulted in the city’s first deficit of HK$37.8 billion ($4.8 billion) in 15 years, since the severe acute respiratory syndrome (Sars) outbreak.
The administration predicted there would be deficits over the next five years, ranging from HK$7.4 billion to HK$17 billion. Next year’s would also hit an all-time high – of HK$139.1 billion – because of once-off relief measures.