HK's financial system lauded

January 20, 2022

The International Monetary Fund Staff Mission today commended Hong Kong's strong economic recovery and the Government's efforts to safeguard financial stability.


The mission made the assessment in its concluding statement which was published today following the completion of the 2022 Article IV Consultation with the Hong Kong Special Administrative Region.


It reaffirmed Hong Kong's position as a major international financial centre and recognised that the city's financial sector, underpinned by robust regulatory and supervisory frameworks, has continued to expand even during the COVID-19 pandemic.


The well-functioning Linked Exchange Rate System remains key to safeguarding economic and financial stability, while Hong Kong's macroprudential policies and strong institutional frameworks have also provided it with important buffers to cope with economic shocks.


The mission noted that Hong Kong's economy has recovered strongly with the support of swift and bold policy responses. It projected a growth of 6.4% and 3% in the city's real gross domestic product in 2021 and 2022.


There is upside potential for Hong Kong's economic growth due to factors including a faster-than-expected global recovery and the development of the Guangdong-Hong Kong-Macao Greater Bay Area, it said.


Noting that the large fiscal stimulus has helped mitigate the impact of economic shocks on Hong Kong, the mission recommended that Hong Kong's fiscal policy return to a balanced budget in a gradual manner and it should focus on more targeted support measures with a view to backing balanced and inclusive economic growth and addressing structural challenges.


Meanwhile, the mission recognised the Government's ongoing efforts to enhance the green and sustainable finance ecosystem, such as adopting internationally accepted standards and promoting eligible green and sustainable financing.


It also remarked that capitalising on opportunities from the Mainland and strengthening regional and international collaboration on the green development front are conducive to consolidating Hong Kong's position as a major international financial centre.


Financial Secretary Paul Chan welcomed the mission's recognition of Hong Kong's strong economic recovery supported by the Government's swift and bold policy responses, including the Consumption Voucher Scheme and various anti-epidemic support measures.


He said: “I am glad that the mission commends our resilient financial system underpinned by robust regulatory and supervisory frameworks and ample buffers built over the years.


“We will continue to stay highly vigilant and monitor the economic situation closely, with a view to maintaining financial stability and fostering balanced, inclusive and sustainable growth.”


Monetary Authority Chief Executive Eddie Yue also welcomed the mission's positive assessment of Hong Kong's regulatory and supervisory framework that it has kept pace with market developments and technological advancements.


The mission held virtual discussions with government officials, regulators and private sector representatives in Hong Kong from December 1 to 15 last year for the 2022 Article IV Consultation with the Hong Kong SAR.


The full report will be discussed by the fund's executive board next month.

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