(Bloomberg) -- Hong Kong’s government unveiled a HK$120 billion ($15.4 billion) giveaway budget aimed at jump starting the finance hub’s recession-wracked economy.
Financial Secretary Paul Chan announced tax cuts and a payment of HK$10,000 to each permanent resident of the city aged 18 or older.
Here’s a look at who will benefit -- and what stands to suffer.
- Households: The government will hand out HK$10,000 to each permanent resident of the city aged 18 or older and offer a rebate on salary taxes capped at a HK$20,000 reduction on each.
- Investors: Will get a waiver on stamp duty on stock transfers paid by exchange-traded fund market makers.
- Home buyers: A pilot scheme to offer, through banks, fixed-rate mortgage loans. The plan involves interest rates of 2.75%, 2.85% and 2.95% per annum for periods of 10, 15 and 20 years respectively, with a cap of HK$10 million per loan transaction. The total loan amount under the scheme is HK$1 billion.
- Sportspeople: HK$500 million a year over the next four years -- from HK$300 million currently -- for sporting activity.
- Green Motorists: Electric vehicles will get another push with a HK$2 billion pilot scheme this year for charging facilities and formulate the city’s first roadmap on the popularization of EVs.
- Tourism: An extra HK$700 million goes to the tourism board.
- Small and medium-sized businesses: To be offered low-interest loans, a lower profit tax and waived business registration fees.
- Students: The government will pay about HK$150 million for secondary school examination fees for those writing 2021 exams.
- The treasury: Hong Kong expects a record deficit of HK$139.1 billion for the 2020-2021 fiscal year.
- Hong Kong’s credit rating: The slump in economic growth coupled with bigger spending is an obvious risk to the city’s rating. In January, Moody’s Investors Service downgraded Hong Kong and cited government “inertia” as a cause.
- Reputation for fiscal prudence: The budget, loaded with one-off payments, spends a lot of money. But it may not address the underlying weaknesses of the economy, according to Alicia Garcia Herrero at Natixis SA.
“The bulk of the money spent is for the one-off cash disbursement per adult. This is obviously un-targeted and regressive and will not solve the problem of those most severely hit,” Garcia Herrero said.
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