Hong Kong does not plan to get another transfer from its Exchange Fund in the next five years, the finance chief has said, citing a new medium-range forecast explaining why the rare move will not be repeated.
Financial Secretary Paul Chan Mo-po elaborated on his fiscal plan on Saturday, after his budget announcement to withdraw HK$150 billion (US$19.2 billion) from the government’s main investment arm and de facto sovereign wealth fund sparked concerns about the city’s financial stability.
“In the entire medium-range forecast, apart from the HK$150 billion transfer over the two years just mentioned, there are actually no other transfers projected,” Chan said on a radio programme. “I will not make this a normal practice.”
His assurances follow Wednesday’s budget announcement that the government would withdraw HK$75 billion annually for two years from the Exchange Fund’s investment income to top up the Capital Works Reserve Fund.
The move, justified by the fund’s record-high investment income of HK$330 billion last year, aims to support the Northern Metropolis and other infrastructure projects.
Chan argued that with the Exchange Fund’s total assets exceeding HK$4.1 trillion, the transfer represented only about half of last year’s investment gains and would not undermine the city’s financial stability or its ability to defend the currency peg.
