Date
24 September 2017
IMF expressed support for the Hong Kong currency's link to the US dollar, while Financial Secretary John Tsang said the city has a strong foundation to face volatile global markets. Photos: AFP, HKEJ
IMF expressed support for the Hong Kong currency's link to the US dollar, while Financial Secretary John Tsang said the city has a strong foundation to face volatile global markets. Photos: AFP, HKEJ

IMF reiterates support for Hong Kong dollar peg

Hong Kong should maintain its dollar peg as the cornerstone of stability in its financial system, given its small open economy, the International Monetary Fund said.

The international body forecast that the city’s economy is likely to expand 2.5 percent this year, with an annual growth rate of 3.5 percent in the medium term, the Hong Kong Economic Journal reported on Thursday.

Hong Kong is poised to face increasing challenges as its interest rates rise alongside the hiking cycle of the United States’ fed fund rate while economic growth and property price rises are slowing down, the IMF said in a staff report.

It called on the government to increase spending on infrastructure and urban renewal projects as well as adopt more supportive measures for small enterprises in its new budget policy to be unveiled in February.

Reducing stamp duties while maintaining prudential policies in the property market should be considered when property transactions shrink to a level that negatively affects the economy, the fund said. 

The IMF also urged authorities to strengthen regulations on securities, brokerage trading and asset management markets amid new business structures and models as well as new channels linking the markets in Hong Kong and mainland China.

Financial Secretary John Tsang said Hong Kong has a strong and stable foundation to face global market volatilities triggered by the US rate hike cycle.

[Chinese version中文版]

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