Hong Kong Set for Major New Round of Stimulus Amid Virus
The Hong Kong government is set to announce a fresh round of more than HK$30 billion ($3.87 billion) in stimulus
(Bloomberg) -- The Hong Kong government is set to announce a fresh round of stimulus measures to shore up the crippled economy, with a local media report saying the total could exceed HK$100 billion ($12.9 billion).
The aid package will mostly be dedicated to subsidizing wages in sectors hit by closures and restrictions imposed to curb the deadly virus, according to the South China Morning Post. The newspaper earlier reported the package would be worth HK$30 billion.
The Executive Council is meeting to discuss the measures and an announcement could come as soon as Wednesday evening, the Hong Kong Economic Journal reported, citing unidentified people.
The Hong Kong government is under pressure to support an economy that had already slid into recession following months of political unrest and is further pressured by the anti-virus measures. In February, the government announced a HK$30 billion anti-epidemic fund and a HK$120 billion relief package in this year’s budget centered on a HK$10,000 handout to all permanent residents age 18 and above.
Hong Kong has fared better than many other regions in controlling the disease, with confirmed cases at about 935 on Wednesday. Yet a second wave of registered infections brought by residents returning from overseas has caused alarm and spurred discussion of tighter restrictions including closing all non-essential businesses.
If the package exceeds HK$100 billion that would equate to more than 3% of the city’s economy and is “the way to go,” according to Alicia Garcia Herrero, chief Asia Pacific economist at Natixis SA in Hong Kong. “Hong Kong has the fiscal muscle to afford this,” she said.
The aid package would cover businesses that so far have been left out of support measures, including those related to schools such as tutorial centers, school bus operators and externally contracted physical education coaches, the SCMP reported. Nine types of businesses covered by recent social-distancing measures including movie theaters, gyms and karaoke lounges also would receive aid, as well as firms in the tourism industry.
Fares on public railways also will be temporarily discounted, the paper reported.
A spokesperson with Chief Executive Carrie Lam’s office did not immediately provide comment.
Speaking with the press Tuesday, Lam said she “very clearly” heard the feedback from businesses about helping their workers keep jobs, though she did not elaborate. She said what to include in the round of virus relief measures has been the focus of discussions with local businesses.
The government’s planned cash payout isn’t expected until the third quarter or even later as officials seek spending approval and work through logistical preparations. The government is projecting the start of registrations in July with distribution beginning during the summer vacation.
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