(Photo Credit: Paul Yeung/Bloomberg)

Hong Kong’s first financial deficit in 15 years

The Hong Kong economy is collapsing as a result of the coronavirus outbreak and protests, the government plans on solving this issue with a 120 billion Hong Kong Dollar ($15.4 million USD) stimulus package. The stimulus package will grant every Hong Kong citizen 10,000 Hong Kong dollars (roughly $1,280 USD) for all permanent residents who are at least 18, with an estimated seven million people to benefit from the stimulus package.

Hong Kong Financial Secretary, Paul Chan, indicates this is the first budget deficit in 15 years that began in the third fiscal quarter of 2019. Chan says the situation will likely get worse predicting that the deficit will continue through the next fiscal year and is expected to hit a record high of 4.8% of the city’s GDP in March 2021.

Breaking: Hong Kong permanent residents aged 18 and above will each receive a cash handout of HK$10,000 in a HK$120 billion relief deal. Follow our live coverage of the #HKBudget2020 here: https://t.co/QcBknq7Jtm

— SCMP News (@SCMPNews) February 26, 2020

Chan presented a budget presentation for the economy strained after the months of mass protests, the slowing global economy, and the ongoing trade war between the U.S. and China. These are the factors that pushed Hong Kong into recession, shrinking the economy by 1.2% last year and is the first annual decline through the global financial crisis.

According to Chan, a portion of the stimulus package will be apart of a special fund for declining employment and economic conditions resulting from the coronavirus outbreak. The Hong Kong government will further help the financial situation by slashing income tax for select residents and would impact 2 million taxpayers.

[Thread] 👇

•The @CDCgov has asked Americans to prepare for a likely coronavirus outbreak.

• It has also warned against visiting China, South Korea, Japan, Italy, Iran, and Hong Kong as coronavirus continues to spread. Here’s what you need to know. https://t.co/nkYE37Enqw pic.twitter.com/ZagbVz4DyD

— Business Insider (@businessinsider) February 25, 2020

Low-income residents will be offered a month of free rent for public housing and provide a one-time allowance to 200,000 disadvantaged households. The projected budget deficit for next year indicates it might be higher than expected but Hong Kong maintains $145 billion in fiscal reserves.

Hong Kong has already dispersed stimulus funds worth over 30 billion Hong Kong dollars ($3.9 billion USD). Chan believes that Hong Kong can recover from this deficit in the long term, citing the recovery from the SARS outbreak in 2003.