HONG KONG: Hong Kong unveiled a $11.8 billion (Hong Kong dollar) emergency economic package yesterday, the region's biggest so far, to ease the impact of the SARS virus. It offers loan guarantees and lower rents for hard-hit businesses.
At $1.5 billion (US dollars), the package is roughly 12 times the size of a package of measures announced by Singapore to help its economy due to SARS, and amounts to about 1 per cent of Hong Kong's gross domestic product.
Financial Secretary Mr Antony Leung said the relief measures would lead to a worsening of Hong Kong's already large budget deficit this financial year ending March 2004, but the government still hoped to balance its books by 2006/07.
Economists said throwing money at the problem was unlikely to significantly improve crumbling consumer confidence and would simply blow a larger hole in the budget deficit.
"The issue really is one of confidence, and not of people's purchasing power," said Mr Joe Lo, senior economist at Citigroup. "So I doubt that the measures would have a significant impact in boosting consumption, but a further widening of the deficit is a definite."
Hong Kong's chief executive Mr Tung Chee-hwa said in a news conference the government would guarantee up to $449 million (US dollars) in short-term loans for SARS-hit businesses. The government would also cut rentals on its properties by 30-50 per cent for business for three months. Government rates and utility charges would also be reduced for three months.
Some 105 people have died from SARS in Hong Kong in recent weeks. It has left hotel occupancy rates in single digits as tourist bookings have plummeted 80 per cent.
Tourism contributes more than 6 per cent of Hong Kong's annual gross domestic product, and the government has said it will not be able to meet its goal of achieving its former target of 3 per cent GDP growth this year. Hong Kong has felt the greatest economic impact from the outbreak of the disease even though it originated in China.
- (Reuters)