The IMF has expressed support for the work of Hong Kong’s Working Group on Long-Term Fiscal Planning, which is looking at the fiscal strategy in the long term. The Group is investigating the question of balancing government revenues and spending while dealing with the inequality of income and wealth and the problem of an ageing population. These problems need to be addressed while maintaining low tax rates.
In the short term the economic position is improving and the IMF agreed with the recent termination of some one-off measures that had originally been introduced to stimulate the economy. In the view of the IMF the main threat to stability comes from the housing market and this could only be resolved by making sure there is an adequate supply of housing. To increase the supply of housing requires years to achieve, and some fiscal measures will be required in the shorter term to make sure there is a manageable adjustment to the housing market and to ensure that fiscal stability is maintained. Stamp duty would therefore need to be decreased as the economic situation improves.
