Biggest ever fiscal deficit coming, Paul Chan warns

Paul Chan is expected to announce a first deficit in 15 years when he gives his budget. Photo: RTHK

Financial Secretary Paul Chan warned on Sunday that Hong Kong is likely to see its biggest ever budget deficit in the next fiscal year as it deals with the impact of the coronavirus outbreak and violent protests that have helped push the SAR into recession.



However, writing on his official blog Chan said the government could still afford coronavirus relief measures because it held fiscal reserves of more than HK$1.1 trillion.



The administration announced on Friday that it would offer a HK$25 billion dollar package of measures for people and businesses affected by the coronavirus outbreak that has left 56 people in the SAR sick.



The package includes handouts for businesses in the hard-pressed catering, retail and tourism sectors, as well as increased allowances for poor families and students.



Chan warned that the government was likely to remain in the red for a number of years as it was also dealing with the aftermath of violent protests last year. He said the government would have to pay more attention to financial sustainability and not spend beyond its means in future.



The financial secretary is expected to report that this fiscal year has seen Hong Kong record its first fiscal deficit in 15 years when he gives his budget later this month.



The SAR's previous biggest deficit was more than HK$60 billion dollars in 2001/2002, according to figures from the Financial Services and Treasury Bureau.



Hong Kong slipped into recession, its first in a decade, in the quarter ending in September. Besides the protests, the Sino-US trade war was cited as a major factor in the economic contraction.