IMF Commends Hong Kong's SARS Package

The International Monetary Fund (IMF) has welcomed the Hong Kong Special Administrative Region (HKSAR) Government’s temporary fiscal relief and support package to address the impact of SARS. The Staff Report of the IMF’s Article IV Consultation on Hong Kong, released on May 30, 2003, said the package was a timely and appropriate response.

The IMF noted that the Hong Kong economy has begun to show signs of recovery from a prolonged cyclical downturn, thanks mainly to robust exports, and projected real GDP growth at 2.2% for 2003, assuming a revival in exports and domestic demand in the second half of the year.

The IMF expects consumer price deflation to ease to 2% in 2003, but weak property prices, high unemployment and structural factors will continue to dampen domestic demand overall prices.

On the fiscal side, the IMF supports the HKSAR’s objective to balance the budget by fiscal year 2006-07, and agrees that fiscal retrenchment would not be appropriate in 2003-04 because of the weak macroeconomic environment and the need for SARS-related spending.

The HKSAR Financial Secretary Mr Antony Leung said, “We welcome the IMF’s fair and balanced assessment, and its support for the HKSAR Government’s measures to tackle the negative economic impact of SARS. We expect the negative impact of SARS to be one-off and short-term."

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