Hong Kong announces the first budget after the general resignation of pro-democracy lawmakers, the first national security spending of $8 billion

Hong Kong‘s fiscal deficit for the current year is $257.6 billion, and the budget deficit for the 2021/22 fiscal year is expected to be $101.6 billion, Financial Secretary Paul Chan said in the Legislative Council on Wednesday when announcing the budget. He said Hong Kong will continue to record fiscal deficits in the next five years.

Hong Kong’s economy will have negative growth of 6.1% in 2020 due to the Epidemic. Hong Kong authorities introduced economic rescue measures because of the new coronavirus pandemic, including the issuance of consumer vouchers, some tax breaks and other benefits for businesses, these rescue measures helped to make the fiscal deficit last year much more serious than the initial plan of 139.1 billion Hong Kong dollars.

Several government departments have cut spending in this budget, including Radio Television Hong Kong, which is expected to reduce its spending by 4.6 percent next year. But the government will allocate $8 billion to pay for the maintenance of national security. The Department of Justice’s budget for next year is up 29.4 percent, mainly due to increased spending, including litigation costs.

China enacted the Hong Kong National Security Law at the end of June 2020, the 2021 budget for the first Time in the maintenance of national security spending of $ 8 billion, but did not specify the expenditure details, attracted public opinion questions.

The budget also proposes to increase the stamp duty rate on stock transactions from 0.1% to 0.13%. Hong Kong’s stock market reacted sharply, with the Hang Seng Index plunging more than 3 percent in midday trading Wednesday, having fallen by as much as 1,100 points. The Hong Kong Stock Exchange was disappointed with the government’s decision, but said it understood that stamp duty on stocks is a major source of revenue for public coffers.

Hong Kong usually adopts a balanced budget or surplus, because the Hong Kong dollar is pegged to the U.S. dollar to implement a currency system that requires Hong Kong to take fiscal prudence.