IMF hails Hong Kong’s status as global financial hub

TOKYO: Hong Kong’s status as a global financial hub is important not only to China but the rest of the world, a senior IMF official said on Tuesday as the city faced renewed unrest.

“Hong Kong is underpinned by a very strong financial sector … and a monetary system that is anchored to rules, and well governed and well understood by the world,” International Monetary Fund First Deputy Managing Director Geoffrey Okamoto said at a roundtable teleconference.

“Hong Kong is important not just to China but to the rest of world. We want to retain Hong Kong’s (status) as a financial hub,” he said, adding that the IMF expected to issue a revised update to its world economic outlook on Jun 24.

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China’s parliament recently approved a decision to go forward with national security legislation for Hong Kong that protesters, diplomats and some in the business world fear will jeopardise its semi-autonomous status and role as an international financial centre.

Okamoto spoke as hundreds of protesters gathered in Hong Kong’s city centre to mark a year of sustained rallies amid fears of renewed unrest over the national security legislation.

The coronavirus pandemic has pushed economies around the globe to the verge of deep recession, forcing the IMF to cut its world economic forecasts.

Okamoto said that while the immediate response should be to deploy all necessary tools to protect lives and jobs, policy support needed to shift when countries end lockdown measures imposed to contain the pandemic.

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“The reopening of economies … and a return to a growth phase will require different policies. Removing some policy support (may be necessary) because keeping them in place could have more distorting effects,” he said, without elaborating.

Asian economies have deployed extraordinary fiscal and monetary measures to cushion the economic blow from the pandemic.

Some countries with huge overseas borrowing have suffered from massive capital outflows in March, though market volatility has subsided since then.