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Hong Kong budget for fiscal 2022/23

Randy Mancini 2 Feb 23
A general view of skyline buildings, in Hong Kong
FILE PHOTO: A general view of skyline buildings, in Hong Kong, China July 13, 2021. REUTERS/Tyrone Siu

February 23, 2022

HONG KONG (Reuters) -Here are highlights of Hong Kong’s budget for the fiscal year starting in April 2022, unveiled by Financial Secretary Paul Chan on Wednesday:

KEY FIGURES

* Counter-cyclical measures will total over HK$170 billion ($21.79 billion), to boost economy by about three percentage points

* Says 2021 GDP growth at 6.4%

* Forecasts 2022 GDP growth between 2 and 3.5%

* Forecasts 2022 headline inflation at 2.1%

* Forecasts 2022 underlying inflation at 2%

* Forecasts average growth rate of 3% per annum in real terms from 2023-2026

* Q4 GDP growth at 4.8% year-on-year

* Q4 GDP growth at 0.2% quarter-on-quarter

* Says economic activities, particularly the consumption-related sectors, will continue to be under intense pressure

* Says the economic performance in the first quarter is not optimistic

MEASURES:

* Says to reduce salaries tax payable by 100%, capped at HK$10,000

* Says to issue HK$10,000 electronic consumer voucher for residents 18 and over

* Says to support enterprises, will reduce profit tax for the year of assessment 2021/22 by 100%, subject to a ceiling of HK$10,000

* To waive business registration fees for 2022-23

* To earmark HK$13.2 billion to create time-limited jobs in public and private sectors to ease the unemployment situation

SPECIFIC INDUSTRIES:

* To prepare for the return of Greater China companies to seek secondary listing in Hong Kong, offering more flexibility to issuers seeking dual‑primary listings

* Says Securities and Futures Commission and Hong Kong Exchanges and Clearing Limited are reviewing the listing requirements to meet the fundraising needs of advanced technology enterprises

* To explore ways to further expand the channels for the two-way flow of cross-boundary RMB funds, and to promote development of offshore RMB products

* To issue not less than HK$15 billion inflation-linked bonds

* To issue not less than HK$35 billion of silver bonds

* Says to issue US$4.5 billion of green bonds

* Says working with Chinese authorities to consider enhancing measures for wealth management connect scheme in Greater Bay Area

* Says expects exchange traded funds (ETFs) connect programme to start soon

* To roll out HK$1.26 billion to support tourism industry

* Government is pressing ahead with Hong Kong’s early accession to the Regional Comprehensive Economic Partnership

* To strengthen economic and trade connections with the economies in the Middle East

* To introduce new legislation forup to six months to prohibit landlords from terminating the tenancy to tenants of specified sectors for failing to settle rents on schedule

* HKMA will be in close communication with the banking sector and banks will exercise flexibility if the repayment ability of any landlord is affected owing to reduction in his rental income

* To gradually convert some existing petrol or liquefied petroleum gas filling stations into quick charging stations, supporting the provision of vehicles charging services

PROPERTY MARKET

* Estimates the overall land supply in 2021‑22 can provide about 20,000 units

* Says 2022‑23 Land Sale Programme will comprise 13 residential sites and four commercial sites, capable of providing about 8,000 residential units and about 300,000 square metres of commercial floor area respectively

* Says to secure 103 hectares of land in the coming five years for private housing development, for production of 57,000 units

* Says first-time home buyers will be able to obtain mortgage of up to 80% for purchase of properties worth less than HK$12 million, compared to HK$10 million previously

OTHER PROJECTIONS

* Forecast a surplus of HK$18.9 billion for 2021‑22

* Fiscal reserves are expected to be $946.7 billion by end-March 2022

* Fiscal reserves are estimated at HK$1.065 trillion by the end of March 2027, representing 28.9% of GDP, or equivalent to 16 months of government expenditure

* Says it is not the appropriate time to revise the rates of profits tax and salaries tax, which are its major sources of revenue, amid the current economic situation

* Government anticipates that a deficit will still be recorded in 2022‑23

* The 2021‑22 revised estimates on government revenue is HK$682.7 billion, 15% higher than the original estimate, due to higher revenues from land premium and profits tax

* Total government revenue for 2022‑23 is estimated at HK$715.9 billion, of which revenue from land premium is estimated at HK$120 billion and revenue from stamp duties is estimated at HK$113 billion

* Total government expenditure for 2022‑23 will increase by 15.5% to HK$807.3 billion

($1 = 7.8029 Hong Kong dollars)

(Reporting by Donny Kwok; Editing by Simon Cameron-Moore)