【明報專訊】THE Hong Kong economy is in free fall, with the government forecasting that the city will register its first budget deficit in 15 years. With ample fiscal reserves amounting to more than $1 trillion, the government may have no difficulty supporting itself for one or two years. However, it is unknown how long the internal and external problems troubling the economy will remain. Sino-US rivalry may continue to affect Hong Kong in the long term. Renewed violence over the weekend has also raised concerns about when stability can really be restored in the city. Hostility between China and the US as well as the storm over the extradition bill has brought about structural changes to the ecology of the Hong Kong economy. The government must consider the new situation when managing public finances. However, it must also adhere to principles like ''spend when necessary''. It should not slow down the pace of economic restructuring and the tackling of deep-rooted conflicts in society.
The latest data on Hong Kong's economic recession is terrifying. Last week the government reported that the value of the city's total exports had fallen sharply in October by almost a tenth year on year. Yesterday it released figures showing that the total value of retail sales had plummeted year-on-year by 24.3% in October, the steepest monthly decline on record. Amid the continuing Sino-US trade war, Hong Kong has suffered from a double whammy of an unstable external economic environment and incessant social unrest. In view of a sharp decline in consumption away from home, a significant drop in the number of tourists and a slump in retail sales, the government has earlier estimated a growth rate of minus 1.3% for the whole year. Financial Secretary Paul Chan Mo-po said the losses caused by the social upheaval in recent months account for about 2% of the city's GDP. Given the dire economic situation of Hong Kong, it is inevitable that the revenue received by the public coffers has shrunk significantly. Chan estimates that the government will have a budget deficit for the first time in 15 years at the end of the financial year.
Chan had estimated a financial surplus of over $10 billion in his budget at the beginning of this year. But the economy was then caught up in unexpected headwinds. Given several abortive land sales in the second half of the year and the relief measures of over $20 billion rolled out since the outbreak of the anti-extradition storm, a budget deficit is something well anticipated. The only question is its exact amount. There are often debates over whether ''internal factors'' or ''external factors'' have contributed more to the plunge of the Hong Kong economy. The reality is both have dealt a heavy blow to it. No party should wishfully hope for a quick disappearance of these internal or external troubles.
Now that the government will be in the red, it is of course necessary to review its income and expenditure and think about broadening sources of income and cutting costs. Some government departments have long shown poor work efficiency and the resources have not been well utilised. There are problems that must be fixed. However, the authorities should not repeat the mistakes made by the government at the turn of the century, which cut medical and social welfare expenses deeply for the mere sake of reducing costs, leading to a squeeze on all kinds of social services now. In recent years, the government has finally put aside the ideological burden of being a ''small government''. Public expenditure, much of which involves expenses on social welfare, education as well as innovation and technology, has continued to grow and is now more than 21% of the city's GDP. From housing, elderly care to health care services, Hong Kong is still doing not enough in many aspects. The government must continuously invest in the future while facilitating economic restructuring. If it hastily goes for a big cut in those expenses, that will be tantamount to a retrograde step. As the internal and external environments have changed for the Hong Kong economy, the government must take note of the times and situation and adhere to the the principle of prudent management of its finances. At the same time, the overriding principle of investing in the future should never be abandoned.
明報社評 2019.12.03：財赤重臨理財須審慎 「應使則使」原則要堅持
ample：more than enough
mere：used when you want to emphasise how small, unimportant, etc. sb/sth is
retrograde：returning to older and worse conditions, methods, ideas, etc