IMF Commends HK's Economic Performance, Fiscal Policies

The International Monetary Fund (IMF) gave a positive assessment of Hong Kong's economic performance and prospects as well as its economic and fiscal policies in its Staff Report on the Hong Kong Special Administrative Region (HKSAR) released Saturday.

The IMF is impressed with the HKSAR's rapid economic recovery in 1999-2000 from the Asian crisis, attributing the successful turnaround of the economy to the flexibility of Hong Kong's markets and to the authorities' pragmatic handling of fiscal policy during the recession.

Based on the economic rebound during the first three quarters of the year, the IMF revises upward its original forecast last November for HK's GDP growth in 2000. The IMF also observes that the Hong Kong economy is likely to benefit from the mainland's prospective accession to the WTO.

The IMF expresses continued support for the linked exchange rate system, which has underpinned confidence in Hong Kong as an international financial center and helped it respond to cyclical shocks and structural changes efficiently.

Noting the resilience of the banking system during the Asian financial crisis, the Staff Report commends the Hong Kong authorities for the highly effective regulatory and supervisory framework. It welcomes the implementation of the U.S. dollar clearing system, and the recent steps taken to reform the banking and securities markets, including initiatives to strengthen securities regulation, and the proposed establishment of a credit reference agency.

Welcoming the publication of the Staff Report, Financial Secretary Donald Tsang said "The IMF's positive assessment is an endorsement of the clear and transparent economic policy adopted by the HKSAR government."

"We are also fully committed to continuing adherence to the two key elements of our sound macroeconomic management - prudent fiscal policies and a currency board system," he said.

Meanwhile, Joseph Yam, chief executive of the Hong Kong Monetary Authority, also welcomed the Staff Report's positive remarks on Hong Kong's banking system.

"The banking reform program, which is making good progress, is intended both to open up the banking sector to greater competition and to reinforce safety and soundness," Yam said.






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