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Budget Speech

Short-term Strategies  

Countering Financial Crisis

24.      The global financial situation has deteriorated rapidly since last September. We have taken the following multi-pronged, strategic measures.

First, last September we introduced a series of measures to ensure the stability of financial institutions and the market to bolster public confidence in our financial systems. These measures included the provision of liquidity assistance to the banking system, provision of full deposit guarantee according to the principles of the Deposit Protection Scheme and the establishment of a Contingent Bank Capital Facility;

Second, in November and December last year, we introduced new measures in two phases to address the funding needs of small and medium enterprises (SMEs). In the first phase, we allowed greater flexibility in the use of the loans under the SME Loan Guarantee Scheme and extended the guarantee period for the Working Capital Loan. In the second phase, we set up a Special Loan Guarantee Scheme whereby the Government's guarantee ratio was increased to 70 per cent and the guarantee commitment to $100 billion to help SMEs to solve their cashflow problems. Since the launch of these measures, the Government had approved more than 3000 applications, involving loans of over $6 billion;

Third, after the meetings of the Task Force on Economic Challenges, the Chief Executive announced a series of measures to preserve employment, including the provision of more than 60000 employment opportunities this year through expediting works projects, the recruitment of civil servants and creating temporary and other posts. The Government also sought co-operation between the public and private sectors, including universities, statutory bodies and local and international Chambers of Commerce to create employment and internship opportunities; and

Fourth, after introducing a Renminbi 4-trillion stimulus package last November, in December the Central Government introduced 14 measures to support our financial stability and economic development. We are maintaining close liaison with the Central Government and relevant Mainland authorities to ensure maximum benefit of these opportunities for our businesses and employment.

25.      Mr President, in my last Budget I proposed a number of fiscal measures to ease inflationary pressure and to prepare for the expected economic slow-down starting at the end of 2008. In mid-July last year, the Chief Executive announced 10 additional measures to improve people's livelihood. This $57 billion relief package - equivalent to 3.4 per cent of 2008 GDP - helped ease the burden of the grassroots and the middle class and achieved our goal to relieving the hardship being faced by the people. Some of these measures, such as the lowering of the standard rate, the electricity charge subsidy and food assistance, will continue to benefit the citizens in 2009-10.








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Last revision date : 25 February, 2009