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HK budget offers few handouts

HONG Kong's government said its economy will shrink this year for the first time since the Asian financial crisis more than a decade ago, but offered few handouts to taxpayers in the face of the global economic crisis.

Having announced a series of fiscal stimulus steps in recent months, and with government finances under pressure as the financial center's economy contracts, Financial Secretary John Tsang was reluctant to spend a lot more, although he did announce a rebate of up to HK$6,000 (US$769) for 2008/09 income taxpayers.

"We are somewhat disappointed, it was not a bold budget," said Guy Ellis, a partner at PricewaterhouseCoopers. "Unlike in some other budgets around the world, it was not particularly aggressive. There was very little assistance for SMEs, which are a critical part of the economy here."

As taxpayers would not get the rebate until this time next year, there would be no immediate economic boost, he said.

Credit ratings firm Standard & Poor's said Hong Kong's creditworthiness would weaken as a contracting economy would depress government revenue, but it retained a stable outlook on its AA plus rating.

Tsang stressed the importance of maintaining competitiveness, announced a plan to sell government debt and confirmed it would amend tax laws to promote Islamic finance.


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