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Hong Kong budget for fiscal 2021/22

HONG KONG (Reuters) - The following are highlights of Hong Kong’s budget for the 2021/22 fiscal year starting in April.

FILE PHOTO: A man wears a surgical mask walks through financial central district, following the outbreak of the new coronavirus, in Hong Kong, China February 26, 2020. REUTERS/Tyrone Siu

The budget was presented by Financial Secretary Paul Chan on Wednesday.

KEY FIGURES

* Forecasts fiscal deficit of HK$101.6 billion ($13.10 billion)for next fiscal year, or 3.6% of GDP

* 2020/21 budget deficit expected at HK$257.6 billion

* HK$8 billion allocated for “safeguarding national security.” No breakdown available for that part of the budget.

* Government says to launch over HK$120 billion relief package

* Economy shrank 6.1% in 2020, largest annual decline on record

* Latest unemployment rate rises to 7%

* Forecasts 2021 GDP growth between 3.5% to 5.5%

* Forecasts 2021 inflation at 1.6%, underlying inflation at 1%

* Forecasts average growth rate of 3.3% per annum in real terms from 2022-2025

* Q4 GDP -3.0% y/y, +0.2% qtr/qtr

* Fiscal reserves dropped sharply in past two years from the equivalent of 23 months of government expenditure to 13 months

MEASURES:

* Says to reduce salaries tax payable by 100%, capped at HK$10,000

* To offer 1% interest loans to jobless workers, capped at HK$80,000

* Government has earmarked over HK$8.4 billion for the procurement and administration of COVID‑19 vaccines

* Target is to have the majority of the population vaccinated for free this year

* To reduce profit tax for the year of assessment 2020/21 by 100%, subject to a ceiling of HK$10,000

* The reduction will benefit 128,000 businesses and reduce government revenue by HK$1.05 billion

* To waive business registration fees for 2021‑22, this will benefit 1.5 million business operators and reduce government revenue by HK$3 billion

* To relieve people’s hardship, government says to reduce salaries tax and tax under personal assessment for the year of assessment 2020/21 by 100%, subject to a ceiling of HK$10,000.

* This will benefit 1.87 million taxpayers and reduce government revenue by HK$11.4 billion

* To increase stamp duty for stock trading from 0.1% to 0.13%

SPECIFIC INDUSTRIES:

* To earmark HK$934 million to enhance tourism resources

* HK$765 million to support the Hong Kong Tourism Board in reviving tourism

* To discuss Air Travel Bubble arrangements with places that have close economic and trade relations with Hong Kong

* To issue green bonds of up to HK$175.5 billion in next 5 years

* To start bond connect this year

* To issue at least HK$24 billion of Silver Bond and no less than HK$15 billion of iBond this year

* The eligible age for subscribing Silver Bond will be lowered from 65 to 60

* The Hong Kong Stock Exchange will review the overall secondary listing regime

* To expand Stock Connect’s capacity to include ETFs

* To inject HK$4.75 billion per year into the Innovation and Technology Fund two years in a row to sustain its 17 funding schemes and over 50 R&D laboratories in next three years

* Annual capital works expenditure will exceed HK$100 billion in coming years

* Annual total construction output will increase to HK$300 billion, creating over 300,000 employment opportunities

PROPERTY MARKET

* Says 2021-22 Land Sale Programme comprises 15 residential and 3 commercial sites

* The supply is capable of providing 6,000 residential units and 480,000 square metres of commercial floor area

* Together with railway property projects, private development and redevelopment projects, the potential land supply for the whole year is seen to provide about 16,500 units

* Says has identified land for provision of 316,000 public housing units in the coming 10 years

* Total public housing production in the five-year period from 2020-21 is estimated at 101,400 units

OTHER PROJECTIONS

* Expects to record a deficit for four consecutive years

* Aims to trim recurrent expenditure by 1% in 2022-23 with estimated savings of HK$3.9 billion

* The 2020-21 revised estimates on government revenue is HK$543.5 billion, lower than original estimate by 5.1%, due to lower-than-expected revenue from land premiums

* Revenue from land premiums is HK$87 billion, lower than the original estimate by HK$31 billion

* Expects fiscal reserves at HK$902.7 billion by end-March 2021

* Total government revenue for 2021/22 estimated at HK$591.1 billion

* Forecasts fiscal reserves at HK$775.8 billion by end-March 2026, or 22% of GDP, equivalent to 12 months of government expenditure

($1 = 7.7542 Hong Kong dollars)

(This story corrects to reflect HK$8 bln national security budget was allocated, not spent)

Reporting by Donny Kwok; Editing by Kim Coghill

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