Hong Kong government should spend more to boost economy, says former HKMA chief

The Hong Kong government should spend more to drive economic growth and could even go into budget deficit occasionally if the spending was for the public interest, according to Executive Council member Joseph Yam Chi-kwong.

“Indeed, with Hong Kong experiencing historically slow economic growth rates in the past decade and a strong desire of everybody to invest in the future of Hong Kong and build a more dynamic economy, the contractionary fiscal stance on the economy after a decade of fiscal surpluses seems inappropriate, if not irresponsible,” Yam said.

Yam, former chief executive of the Hong Kong Monetary Authority, the city’s central bank, shared his views on public finance in an article titled “Viewpoints on Public Finance in Hong Kong” published on his personal blog on Thursday.

While Article 107 of the Basic Law requires the management of public finance in Hong Kong to “follow the principle of keeping expenditure within the limits of revenue” and to “avoid deficits”, it also says the government should make sure its fiscal policies promote the public interest, he said.

As such, Yam said it could be acceptable for the government to prepare for a budget deficit if the spending could drive economic growth and be of long term benefit to Hong Kong.