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Last updated at: (Beijing Time) Thursday, March 13, 2003

Hong Kong's Budget Measures a Positive Start: S&P

Hong Kong's 2003 budget measures announced earlier this month is a positive start to the process of curbing fiscal deterioration, according to Standard & Poor's Thursday.


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Hong Kong's 2003 budget measures announced earlier this month is a positive start to the process of curbing fiscal deterioration, according to Standard & Poor's Thursday.

All measures and plans, if fully implemented, should significant reduce Hong Kong's deficit by 2006/2007, said Ping Chew, associate director of sovereign ratings group at Standard & Poor's, at a press conference Thursday.

The budget contains significant measures to generate revenue and reduce spending, including increases in rates of taxation, cuts in civil servants' wages, reductions in the overall number of civil servants and sales of assets.

However, Chew cautioned, the pressure to spend more on health, welfare, education and infrastructure projects is likely to remain.

The government's future revenue structure is also dependent on capital revenue, which will comprise about 20 percent of total revenue over the next five years, he noted, adding that further steps will need to be taken over the next few years to meet the goal of balancing the budget.

Standard & Poor's has stressed that Hong Kong's fiscal strategy has to be addressed in accordance with the structural shifts in Hong Kong's economy, especially with respect to the Chinese mainland and transition to a value-added growth model.

The ratings on Hong Kong will therefore continue to depend on a coherent overall fiscal strategy, and review on the credit rating outlook on the local currency will also depend on the budget measures being passed and projected fiscal out-turn being achieved, Chew added.


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