The Hong Kong administration has decided to support its economy by introducing HK$120 billion ($15.5 billion) in fiscal measures, Financial Secretary Paul Chan said in his budget speech.
As part of the effort, the HK$5,000 ($645) in vouchers will be issued in instalments to residents to boost consumption. Businesses and individuals will also receive tax relief.
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Unemployed residents can get loans capped at HK$80,000 Hong Kong dollars ($10,300) in a program that postpones payments for the first year and charges 1% interest. The measures come after Hong Kong last week reported a 7% jobless rate between November and January, the highest since April 2004.
In his speech, Paul Chan forecast the economy is set to grow 3.5% to 5.5% this year, compared to the economic contraction of 6.1% in 2020.
The budget for 2021 “aims to alleviate the hardship and pressure caused by the economic downturn and the epidemic," Chan said.
He said that Hong Kong’s fiscal deficit is at a record high after the government last year spent HK$300 billion Hong Kong dollars ($38.7 billion) on supporting measures, including a cash handout to residents and wage subsidies for businesses.
He also said that mainland China’s economy was “fundamentally sound" despite uncertainties from the epidemic and in US-China relations. Hong Kong, as a semi-autonomous Chinese city, will benefit from this.
“In the medium term, Hong Kong will continue to benefit from the ongoing development of the mainland and the shift in global economic gravity from West to East," Chan said.
With inputs from agencies.
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