10th January 2025 – (Hong Kong) Following the completion of the 2024 Article IV Consultation with the Hong Kong Special Administrative Region (HKSAR), the International Monetary Fund (IMF) Staff Mission released its Concluding Statement on 10th January.
The Mission notes that while Hong Kong’s economy is gradually recovering, it faces several challenges. It reaffirms the region’s status as an international financial centre, highlighting the resilience of its financial system, which is underpinned by strong institutional frameworks, ample policy buffers, and the effective operation of the Linked Exchange Rate System (LERS).
The Mission supports the HKSAR Government’s ongoing medium-term fiscal consolidation efforts, considering them appropriate given the current economic landscape. It anticipates that fiscal space will remain abundant, projecting further reductions in the fiscal deficit due to new revenue measures, expenditure controls, and the tapering of pandemic-related spending.
Financial Secretary Mr Paul Chan expressed his appreciation for the Mission’s acknowledgment of Hong Kong’s economic recovery and the resilience of its financial system. He emphasised the government’s commitment to strengthening Hong Kong’s role as an international financial hub, particularly in connecting with both the Mainland and global markets under the ‘one country, two systems’ framework.
Mr Chan also highlighted the government’s careful approach to fiscal consolidation amid an uncertain external environment and ongoing structural adjustments in the economy. He stressed the importance of identifying new revenue sources while curbing expenditure growth to restore fiscal balance in the coming years. The focus will be on managing recurrent expenditure growth and maintaining Hong Kong’s competitive edge through a straightforward and low tax system, ensuring minimal impact on the public.
Chief Executive of the Hong Kong Monetary Authority (HKMA), Mr Eddie Yue, welcomed the Mission’s recognition of the robust regulatory framework and significant buffers that ensure financial stability in a changing environment. He reiterated the suitability of the LERS for Hong Kong’s open economy, supported by strong institutional policies and ample reserves.
The Mission forecasts real Gross Domestic Product (GDP) growth for Hong Kong at 2.7 per cent for both 2024 and 2025. It commended the HKSAR Government’s initiatives aimed at fostering new growth avenues, including the Guangdong-Hong Kong-Macao Greater Bay Area project, boosting investment, and attracting foreign talent to high-value industries.
Additionally, the Mission noted the solid capitalisation and liquidity of locally incorporated banks, low domestic mortgage delinquencies, and high household credit quality supported by low unemployment rates. It welcomed the HKMA’s implementation of a positive-neutral Counter-Cyclical Capital Buffer (CCyB) rate, enhancing the banking sector’s capacity to lend during periods of systemic risk.
The Mission also acknowledged significant progress made by the HKSAR Government and financial regulators in establishing a green and sustainable finance sector, which could further strengthen Hong Kong’s competitiveness as an international financial centre.
The Mission conducted its visit to Hong Kong from 11th to 22nd November last year, engaging with HKSAR Government officials, financial regulators, and private sector representatives.
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