IMF fully endorses Hong Kong's fiscal policy

In a press information notice issued by the International Monetary Fund (IMF) today (16 February), the IMF Executive Board gave full endorsement to Hong Kong’s existing policy framework including a prudent fiscal policy and the linked exchange rate system.

The notice (see annex) carried IMF's official assessment on Hong Kong’s economic performance and prospects. The assessment was based on an annual consultation under Article IV of the IMF's Articles of Agreement with the Hong Kong Special Administrative Region of China.

In their discussion on Hong Kong, directors of the IMF Executive Board fully supported the maintenance of the linked exchange rate system in Hong Kong. The directors described the system as "an important anchor for economic stability since 1983 and that it plays a vital role in demonstrating the commitment to an independent monetary and exchange rate policy in Hong Kong and in maintaining confidence in its status as an international financial centre."

“Directors observed that, more recently, Hong Kong SAR’s solid fundamentals and decisive policy actions had helped it withstand the regional financial crisis and the bouts of speculative attacks.”

In response to the IMF press information notice, a government spokesman made the following statement:-

“We welcome the IMF’s assessment which is a fair and thorough one. This represents a clean bill of health. We share their assessment that, notwithstanding the recent turmoil within the region, developments in Hong Kong's economy during the past year had been satisfactory in many respects.

“We are aware that our short-term economic prospects may be clouded by the regional financial turmoil, but we are confident that with our solid economic fundamentals and resilience, Hong Kong will recover and come out even stronger.

“We are glad that the IMF has endorsed our continued commitment to prudent fiscal policies. The 1998-99 Budget which has been drawn up in line with this philosophy will be delivered on 18 February.”

Hong Kong Monetary Authority
16 February 1998