Guarding Against Fiscal Risks in Hong Kong SAR

Author/Editor:

International Monetary Fund

Publication Date:

July 1, 2007

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Hong Kong SAR's government faces the dual challenges of volatile revenue and medium term spending pressures arising from a rapidly aging population. Age-related spending pressures raise long-run sustainability concerns, while revenue volatility creates risks to service provision, possibly entailing sudden tax changes, or even requiring new borrowing. After describing the risks associated with aging, the paper uses value at risk techniques to measure the value of the unanticipated risks posed by volatile revenue. The paper also describes the self-insurance value of Hong Kong SAR's traditionally high fiscal savings (reserves), and the impact alternate policy choices could have on revenue volatility.

Series:

Working Paper No. 07/150

Subject:

English

Publication Date:

July 1, 2007

ISBN/ISSN:

9781451867145/1018-5941

Stock No:

WPIEA2007150

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

19

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