Hong Kong will have a large budget deficit next year thanks in part to the continued coronavirus pandemic, the city's head finance official said Sunday.
In his weekly blog post, Financial Secretary Paul Chan Mo-po called the budget "a huge challenge" for Hong Kong as the city looks to stave off rising unemployment and lessen the burden of business closures.
"The government this year has faced an unprecedented budget deficit of HK$300 billion ($38.70 billion) and it is estimated that the budget next year would inevitably be in the red," Chan said.
The continuing pandemic has hampered efforts to reduce the deficit. Government spending grew by 20% this year to reach HK$731.1 billion compared with HK$607.8 billion in 2019 - and this is likely to increase as Chan looks to more financial assistance on top of the HK$6.4 billion already contributed.
"The subsidy has doubled the amount that was given in September, but it is still a drop in the bucket for those sectors that have been struggling for a long time," he said. "It could at most be a temporary relief, but would not be a long-term solution to the root of the problem."
The current scheme has seen HK$5.5 billion distributed via 19 types of subsidies to companies most affected by the pandemic, including restaurants, bars, entertainment businesses and beauty parlors, with HK$900 million reserved for emergencies.
But this will not go far now that the pandemic fourth wave has unleashed another round of lockdown measures on the city.
"What they really need is to return to the normal flow of people in the market as soon as possible, so that they can resume normal business, and are no longer troubled by repeated closure requirements," the Financial Secretary wrote.
Consultation is underway with government officials requesting residents to share views in an online poll before the 2021-22 budget Feb. 24.