Hong Kong Set To Record Its First Budget Deficit In 15 Years

International Business

Hong Kong is set to record its first budget deficit in 15 years as the city's financial secretary told the lawmakers that the economy was set to contract 1.3%

Written By Bhavya Sukheja | Mumbai | Updated On:
Hong Kong

Amidst the democracy protests and the trade war, Hong Kong is set to record its first budget deficit in 15 years as the city's financial secretary Paul Chan reportedly told the lawmakers that the economy was set to contract 1.3 per cent in 2019 hitting Hong Kong's usually bulging coffers. According to international media reports, Chan said that the city's economy is in 'extremely difficult times'. He also blames the 2019-2020 deficit on decreased tax revenues, a slowdown in land sales and recent economic sweeteners he unveiled in a bid to win over the public during a tumultuous year of unrest. 

According to reports, last time Hong Kong recorded a budget deficit was in the aftermath of 2003 outbreak of the Sars virus that killed around 300 people. Hong Kong's budget usually ends the year in an enviable position and successive fat as in March the government said it reserves stook at $150 billion. With the confirmation of the deficit, the city's aviation regulator gave Hong Kong Airlines five days to find fresh revenue streams or risk seeing its license suspended. 

READ: Hong Kong: Hundreds Of Office Workers Begin Week-long Lunchtime Protests

The demonstrations

The city has been battered by nearly six months of protests. In the recent events, riot police have fired tear gas to disperse thousands of anti-government protesters in Hong Kong as the protestors took to the streets chanting "revolution of our time" and "liberate Hong Kong”. The incident took place in the busy commercial district of Tsim Sha Tsui followed by a march by hundreds of people heading towards the US consulate to show gratitude towards US. Shops and business establishments were shuttered in the area early as the police sprayed volleys of tear gas at protesters as they marched towards the city’s Kowloon waterfront, which is home to the city's luxurious hotels and shopping malls. Police have arrested a lot of people as the tear gas sent hundreds fleeing toward the harbour.  

READ: China To Suspend US Navy Visits To Hong Kong Over New Law

US-China trade war

The economy has also been affected by the US-China trade war. China has retaliated with tariff hikes on US imports. The phase one agreement might not be signed this year quoted trade experts and people close to the White House last month. The officials earlier expected to come to a deal by November end. Beijing invited US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin for in-person talks in Beijing said US Senate Finance Committee Chairman Chuck Grassley told reporters on November 26. He added that Lighthizer and Mnuchin were willing for negotiation if they saw "a real chance of getting a final agreement". Charles Boustany, a former congressman from Louisiana and counsellor at the National Bureau of Asian Research, said that China will anyway continue to do what it's doing and the deal will just be the status quo. Moreover, inconsistencies in China’s new foreign investment law will fail to fulfil the benefits of increased access to China’s financial services market, they added.

(With agency inputs)

READ: Advertising Workers Strike To Support Hong Kong Protests

READ: Hong Kong: Police Fire Tear Gas As Thousands Take To Streets In Fresh Wave Of Protests

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