A HK$27 billion (US$3.48 billion) housing reserve is being established to tackle the projected deficit of the Housing Authority in the long term and help it achieve the government’s target for new homes.
The Hong Kong Monetary Authority, the city’s de facto central bank, will manage the new reserve.
The HKMA will fund it initially with investment income from the city’s fiscal reserves this year, the Hong Kong Economic Journal reported Friday.
The government may inject more funds later, depending on the level of the Housing Authority’s deficit, which is projected to reach hundreds of billions of HK dollars over the government’s decade-long housing plan, the newspaper said, citing sources.
Anthony Cheung Bing-leung, the secretary for transport and housing, said earlier the 290,000 public flats to be built across Hong Kong will cost HK$290 billion.
Meanwhile, the Housing Authority is expected to post decreasing surpluses, projected at HK$61.7 billion for 2014/2015 and HK$28.3 billion for 2017/2018, and eventually go into deficit.
A spokesman for the authority said it will continue to report on its five-year budget to the government and review its fiscal status regularly before applying for funding from the government.
Billy Mak, associate professor of finance and decision sciences at Hong Kong Baptist University, said the new housing reserve is too small.
“The HK$27 billion housing reserve in fact accounts for less than 10 percent of the government’s over HK$700 billion in fiscal reserves,” Mak said.
Sources told the newspaper the government may set up similar reserve funds for other purposes.
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