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Business / Economy

IMF acknowledges Hong Kong's strong buffers for meeting challenges ahead

(Xinhua) Updated: 2015-12-16 09:54

HONG KONG - An International Monetary Fund (IMF) Staff Mission to the Hong Kong Special Administrative Region has lauded the regional government's prudent fiscal management and robust regulatory regime for the financial system.

The IMF mission also remarked that, together with the Linked Exchange Rate System, those strengths would provide Hong Kong with strong buffers to deal with near-term challenges, while laying the foundations for steady growth and healthy job creation in the medium term.

The assessment was made in the concluding statement of the IMF mission published Tuesday. The mission visited Hong Kong from Nov. 3 to 12.

The mission forecast Hong Kong's real GDP growth to be around 2.25 percent in 2015, fuelled by robust domestic demand and supportive fiscal policy, despite a drag from the global demand and trade slowdown.

The major challenges ahead include the impact of rising interest rates in the United States, possible price correction in the property market, and Hong Kong's exposure to stresses in the mainland. The mission assessed that the risks would be manageable, considering the strong buffers in place in Hong Kong.

As for areas for further attention, the mission recommended that the authorities should complete the legislative process on a resolution regime, continue to strengthen the regulatory regime for the securities market, broker dealers and asset managers, and fully implement a risk-based capital regime for insurance groups.

Hong Kong's Financial Secretary John Tsang said: "I welcome the IMF's recognition of our well-preparedness for key challenges ahead. The government will continue to enhance Hong Kong's economic and financial resilience in managing potential market risks and unforeseen external developments."

"Looking ahead, we will continue to capitalize on Hong Kong's unique advantages and seize the opportunities arising from the increasing trade and financial links with the mainland."

Norman Chan, chief executive of the Hong Kong Monetary Authority, said: "I welcome the IMF's continued affirmation that the Linked Exchange Rate System remains the most suitable regime for Hong Kong as a small and open economy. We are also glad to note the IMF's endorsement of the counter-cyclical macroprudential measures implemented by the Hong Kong Monetary Authority. We will remain vigilant in maintaining the stability and resilience of the banking system."

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