Hong Kong on Wednesday unveiled a record budget deficit as it dishes out a HK$120 billion (US$15.4 billion) relief package to shore up an economy battered by the China-U.S. trade war, lingering social unrest and the coronavirus epidemic.

Announcing the annual budget at the legislature, Financial Secretary Paul Chan said HK$37.8 billion deficit was expected for the 2019 fiscal year, which spans from April to March, marking the first budget deficit since 2005, while a record high deficit of HK$139.1 billion was estimated for the 2020 fiscal year.

[NurPhoto/Getty/Kyodo]

"I forecast a deficit for the next five years as well," Chan said. "Although a record high deficit is envisaged in next year's budget, I believe that only with such a budget can we help our community and local enterprises ride out their difficulties."

On top of HK$30 billion earmarked for job-saving and economy-boosting measures, a HK$30 billion anti-epidemic fund will ease the financial burden for businesses and individuals caused by the new coronavirus epidemic, including tax breaks, social welfare handouts, rental subsidies for public housing, utilities subsidies and a healthcare funding hike.

Cash handouts of HK$10,000 will be given to some 7 million people aged 18 or above, Chan said, to hopefully boost spending and relieve people's financial burdens caused by social unrest in the past months and the epidemic.

Months of unrest caused by the government's failed attempt to legislate a bill last year to facilitate extraditions to mainland China and the new coronavirus outbreak have driven the economy further down, affecting particularly the retail and travel sectors.

The economy entered a recession and contracted by 1.2 percent in 2019, marking the first annual decline since 2009, and it is expected to grow by negative 1.5 percent to 0.5 percent this year.

"We may need to consider seeking new revenue sources or revising tax rates. The one-off relief measures may also have to be progressively reduced," Chan said.

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