HONG KONG (BLOOMBERG) – Hong Kong’s Financial Secretary Paul Chan pledged HK$120 billion (S$20.4 billion) of fiscal support targeted at consumers and the unemployed to help boost an economy emerging from two years of recession.

The counter-cyclical measures include spending vouchers of HK$5,000 for each resident and HK$15 billion of guaranteed loans for those without jobs, Mr Chan said in his budget speech to the Legislative Council on Wednesday (Feb 24).

To boost revenue, he proposed raising the stamp duty on stock trading to 0.13 per cent from 0.1 per cent.

Mr Chan said the focus of the budget is on stabilising an economy hit by political and social unrest in 2019 and then the coronavirus pandemic last year. After a record contraction of 6.1 per cent last year, the economy will grow in a range of 3.5-5.5 per cent in 2021, he said.

The consumption vouchers should help stimulate spending, benefiting restaurants, retailers and tourism businesses knocked by virus shutdowns last year. Retail sales in the city have plummeted and unemployment surged to the highest in more than 16 years.

Other highlights of the budget speech:

– Tax rebates provided with a cap of HK$10,000

– Loan guarantees for unemployed capped at HK$80,000 per person. The government will set aside HK$15 billion for the program; loans will carry 1 per cent interest, with applicants given a moratorium on repayments for first year

– Consumption vouchers to cost about HK$36 billion

– HK$1 billion of subsidies for older buildings

– Headline inflation is forecast at 1.6 per cent in 2021, while underlying inflation is estimated at 1 per cent

– Hong Kong Exchanges & Clearing Ltd. shares plunged as the city unveiled its first increase to the stamp duty on stock trades since 1993.

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