Hong Kong will record the first budget deficit in 15 years
HONG KONG: Hong Kong will record its first budget deficit in 15 years, the city's chief financial officer warned Monday, while the business center is reeling from the commotions of the commercial war and the protests of democracy.
In the last bleak assessment for the city, financial secretary Paul Chan told lawmakers that the economy would contract 1.3 percent in 2019 hitting the city's generally bulky coffers.
Chan blamed the 2019-2020 deficit on the decrease in tax revenues, a slowdown in land sales and the recent economic sweeteners he presented in an attempt to win over the public during a tumultuous year of unrest.
At the end of the financial year, the SAR government will be in red, Chan said, using an abbreviation for the Hong Kong government.
Hong Kong's economy is now in extremely difficult times, he added, calling for political violence to end.
The city has been hit by almost six months of protests caused by the increase in public anger over the Chinese government and the police response to the protests.
Crowds are pushing for greater democratic freedoms and police responsibility, but the city's pro-Beijing leadership has rejected any major political concession.
Increasingly violent demonstrations have affected the retail and tourism sectors, and visitors from mainland China left the city in droves.
Figures published last week showed that land arrivals fell a record 46 percent in October, a generally crucial holiday period in China known as Golden Week.
But the economy has also been affected by the US-China trade war in a city that serves as a crucial link between the authoritarian continent and global markets.
The last time Hong Kong recorded a budget deficit was after a deadly outbreak in 2003 of the Sars virus that killed about 300 people.
The city budget generally ends the year in an enviable position and the successive fat years have created an impressive mattress.
In March, the government said its reserves amounted to USD 150 billion and some critics said that successive leaders have not done enough to alleviate endemic inequality. Confirmation of a deficit will do little to restore business faith in the center since Beijing does not offer a political solution to the crisis.
On Monday, the city's aviation regulator gave Hong Kong Airlines five days to find new sources of income or risk having your license suspended.
The company, which is owned by the HNA Group continental conglomerate, has been one of the highest profile victims due to the large number of visitors and announced last week that it was delaying the salaries of some staff members.