The Hong Kong government has announced that it will be issuing vouchers worth 5,000 Hong Kong dollars to all adults this year in an effort to help the city’s economic recovery from the effects of COVID-19. Financial Secretary Paul Chan stated that the city is just beginning to recover from the restrictions imposed due to the pandemic and that there is a need for people and businesses to regain their vigour.
In addition to the vouchers, Chan also announced a reduction in salaries tax by 100 percent, capped at 6,000 Hong Kong dollars ($765). He also introduced a new capital investment entrant scheme to attract talent. The government has spent over 600 billion Hong Kong dollars ($76.44bn) on various pandemic relief programmes over the past three years, resulting in rare budget deficits.
Hong Kong is counting on increased cross-border business with mainland China, which has also relaxed its COVID rules. The city’s economy is expected to grow between 3.5-5.5 percent this year after contracting 3.5 percent in 2022. Analysts have warned that there is still a high level of uncertainty about the intensity of Hong Kong’s recovery due to its exposure to a weakening global economy and the need to keep up with US interest rate hikes to maintain the local currency’s peg to the dollar.
Overall, the government’s measures are aimed at providing relief to citizens and businesses while also ensuring fiscal prudence. It remains to be seen how effective these measures will be in helping the city’s economic recovery.