Hong Kong plans to provide an incentive to residents to discourage them from using a HK$36 billion (US$4.6 billion) budget cash handout, amid concern that the pace of inflation may reach a 14-year high.
Hong Kong Financial Secretary John Tsang (曾俊華) last week -abandoned a budget plan to inject HK$24 billion into pension fund accounts, caving into demands from lawmakers, and said he would instead hand out HK$6,000 each to residents.
“Recipients will be able to draw on this cash as they wish,” Tsang said in a speech broadcast by the Radio Television Hong Kong yesterday. “There will also be an incentive, perhaps in the form of an interest payment, to encourage people not to immediately withdraw the money.”
Inflation in the territory may reach 4.5 percent this year, the fastest gain since 1997, Tsang forecast on Feb. 24, as rising -commodity costs, low interest rates and capital flows from developed economies stoke prices. The government abandoned its initial budget plan after a University of Hong Kong poll showed Hong Kong Chief Executive Donald Tsang’s (曾蔭權) popularity fell.
The government will give details of the cash handout “as soon as possible,” the financial secretary said yesterday.
Inflation is accelerating in Asia from Singapore to Vietnam, spurring governments to raise interest rates and let currencies appreciate. China, India, Indonesia, South Korea, Thailand and Vietnam all increased borrowing costs this year, widening the gap with the US Federal Reserve’s near-zero benchmark rate.
The financial secretary said on Feb. 23, when he announced the original budget, that battling inflation and getting ahead of a property bubble were his government’s main tasks this year.
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