Chief Executive Carrie Lam Cheng Yuet-ngor issued a new "Policy Address" to put forward the development strategy of the northern metropolitan area, and said on the TV forum program that it can support early investment through the issuance of bonds.
This Wednesday (October 20), the "Northern Hong Kong Metropolitan Area Concern Group" released the results of a poll saying that nearly 70% of the respondents agreed with the project and suggested that the government use debt issuance or a "shared commitment" that includes borrowing from the market. Mode to cope with development costs.
However, when the Secretary for Financial Services and the Treasury Xu Zhengyu responded to a question from a Legislative Council member on the same day, he only said: "In terms of the promotion of infrastructure projects, the government will formulate the most optimal measures in accordance with the policy objectives and needs, as well as the characteristics and requirements of individual projects. "Financial arrangements suitable for the project" also stated that "anti-epidemic, support for various industries and development of innovation and technology... there is no need to issue bonds in this regard", which seems to indicate that the Hong Kong government is still resisting the expansion of public debt issuance.
The Concern Group of the Northern Hong Kong Metropolitan Area suggested that the cost problem could be solved through "debt issuance," a shared model, and a mixed public-private model.
(Photo by Yuan Shu)
There is a lot of demand for public debt
As early as July this year, the Legislative Council has passed two resolutions in accordance with the Borrowing Ordinance, authorizing the increase of the borrowing ceiling of the "Government Bond Program" and "Government Green Bond Program" to HK$300 billion and HK$200 billion respectively. At the end of August, the total face value of outstanding bonds issued under the "Government Bond Program" was HK$162.733 billion, and the green bonds issued under the "Government Green Bond Program" were about HK$27.255 billion. There is obviously a lot of room for the debt-raising ceiling.
Moreover, as pointed out by the "Hong Kong Northern Metropolitan Area Concern Group", many of the infrastructure projects in this development strategy are environmental protection projects, so they are quite suitable for issuing green bonds to raise funds.
The current green bond framework stipulates that the raised funds must be used for energy efficiency improvement, pollution prevention, clean transportation, green building, nature conservation, and biodiversity, which undoubtedly fully conforms to the "implementation of active conservation policies that create environmental capacity" in the northern metropolis. Fully implement the "sponge city construction concept" and other requirements.
The economy and people's livelihood can also be supported by debt
It is also worth noting that although the retail bonds to individual investors under the "Government Bond Program" currently account for 52%, which is the first time that they surpassed institutional bonds, this is mainly due to the recent launch of two batches of inflation-linked bonds (iBond). In addition, some ten-year institutional bonds have just matured, so the ratio of the two is temporarily matched. However, in October last year, the share of non-institutional investors was only a pitiful 6.3%, regardless of the increase in inventory or encouragement The bond market may benefit the public, and the authorities should try to maintain the proportion of retail bonds.
The bond issuance plan of the 2004 Budget is the "Five Tunnels and One Bridge" bonds, which include the Tsing Ma Bridge and the Lantau Link.
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As for the reason why the Hong Kong government gives priority to institutional investors, it may have something to do with its tendency to only raise debt for large-scale infrastructure projects. However, this concept is actually not adequate. For example, the mainland launched a 1,000 billion yuan anti-epidemic last year. Special treasury bonds also allow individual investors to participate in the issuance process, and they play a very important role in supporting the prevention and control of the epidemic. It can be seen that public bonds need not be limited to cooperating with large-scale infrastructure projects, but are also applicable to daily economy and people's livelihood.
The SAR government sits on ample fiscal reserves, but it often fails to respond to it, or even ignores a certain debt ratio in order to better invest in the future.
With the development of the northern metropolitan area, we hope that the Hong Kong government can also seize this opportunity to review its public financial management strategy and investment responsibilities, especially when it comes to the issuance of public bonds, it should make good use of policy space and consider how to raise debt. Build the foundation for the long-term development of society.
The economy should be sustainable. GDP is not the only rich man who talks about concepts and ideas, but he exposes his shortcomings. The Hong Kong government should take advantage of the low interest rate environment to raise debt