Hong Kong’s government announced it will give permanent residents 18 years and older a one-time payment of $1,284 as well as tax breaks for companies, as part of relief efforts to combat the economic havoc the coronavirus inflicted on residents and businesses, Al Jazeera reported Wednesday.
While the payments and subsidies might prop up some residents and businesses, the long-term economic damage will take longer to heal, the report said.The relief measures, which cost $15.4 billion, have resulted in Hong Kong’s first budget deficit in 15 years — $4.85 billion for the 2019-2020 fiscal year. According to Al Jazeera, Finance Secretary Paul Chan said he expected budget deficits for the next five years.
Is this compensation money going to worsen the country’s economy?
The one-time payments to permanent residents come during the third quarter of a recession. The recession burdens tourism and retail in the area as partial border closures slow visitors and keeps residents away from public areas, the report said. The impact of the coronavirus on the economy has followed a similar pattern to SARS, which also contributed to a recession in Hong Kong in 2003 and 2004. The budget deficit is unusual for Hong Kong, which typically keeps a balanced or surplus budget. Yet, thanks to plenty of saved capital, the city should be able to navigate the tenuous period.
