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Finance chief faces toughest of challenges in delivering budget

South China Morning Post

發布於 2020年02月24日00:02 • SCMP Editorial
  • Hong Kong has suffered from the US-China trade war, months of political unrest and the coronavirus; all eyes are now on Financial Secretary Paul Chan to introduce a spending blueprint that is both caring and visionary
Financial Secretary Paul Chan Mo-po may be facing a budget deficit that is worse than the record HK$63.3 billion in 2002. SCMP / May Tse
Financial Secretary Paul Chan Mo-po may be facing a budget deficit that is worse than the record HK$63.3 billion in 2002. SCMP / May Tse

The government budget to be delivered on Wednesday will be a most difficult task for Paul Chan Mo-po. Facing a record high deficit and a deepening public health crisis, the challenges for the financial secretary are unprecedented.

The room for manoeuvring is further limited following several rounds of multibillion-dollar relief packages to mitigate the fallout of the United States-China trade war and Hong Kong's political unrest.

Thankfully, we have robust fiscal reserves. How to make good use of our hard-earned savings to help the needy and get us back on a stronger footing for recovery will be the major test for Chan.

Even the smartest finance chiefs could not have foreseen the rapid economic decline triggered by the changing sociopolitical environment over the past eight months.

Chan at the RTHK's forum programme Voices from the Hall on Budget Consultation in Kowloon Tong in January. SCMP / May Tse
Chan at the RTHK's forum programme Voices from the Hall on Budget Consultation in Kowloon Tong in January. SCMP / May Tse

Delivering his third budget last February, Chan was optimistic that gross domestic product would grow by 2-3 per cent. But the months-long unrest sparked by the anti-extradition bill movement in June saw the economy contract by 1.2 per cent last year, the first decline since 2009.

How long the health scare prevails remains unclear at this stage. But with the threats from coronavirus infections still looming large, the impact on our already ailing economy is anybody's guess.

What appears to be certain is that the budget deficit might be even worse than the record HK$63.3 billion in 2002. Writing in his blog earlier, Chan warned that the deficit was heading for another record. That is unsurprising.

The sharp economic downturn means a significant drop in revenues. But the government has had no choice but to introduce dozens of relief measures worth of tens of billions of dollars since last summer.

Finance chief issues budget warning over 'finite' resources

The largesse would not have been possible without the hard-earned money of taxpayers over the years. Whether the money has been effectively spent is another matter. Some measures appeared to be targeted and well-intentioned, but others gave the impression that public funds were being used to appease those upset by the government's handling of the protests.

With still so much money in the war chest, there is room to do more. Against the double blow of the political unrest and the coronavirus crisis, the wish lists from political parties this year are even longer. This includes the controversial idea of giving everyone a HK$10,000 cash allowance.

Writing in his blog yesterday, Chan said the budget could not satisfy everyone. How to make good use of the savings without compromising fiscal prudence will be a challenge. The need for a caring and visionary budget has never been stronger. The task to steer the city out of the economic doldrums and rebound on a stronger footing falls squarely on Chan's shoulder.

Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.

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