visimoney
TLDR:
- Hong Kong government proposes issuing bonds to finance infrastructure projects
- Debt financing is seen as a more efficient and equitable way to fund long-term projects
Financial expert Donald Low argues that Hong Kong’s government should consider utilizing debt financing to fund large-scale infrastructure projects, such as the Northern Metropolis and land reclamation on Lantau Island. Despite concerns about deepening the financial hole and burdening future generations, Low believes that borrowing is a necessary and desirable option in the current economic climate. With a deficit of over HK$100 billion, options such as raising taxes or cutting spending are unfeasible. Low emphasizes the importance of educating the public on the benefits of borrowing for infrastructure projects that generate long-term benefits.
Low suggests that a debt sustainability framework should be implemented to ensure responsible borrowing. This includes borrowing only for projects that create valuable assets, presenting a debt sustainability report alongside the budget, linking bonds to specific projects for transparency, and setting limits on the total debt stock and annual debt issuance. By establishing rules and transparency in borrowing practices, the Hong Kong government can build public trust and attract more capital through its bond market.
Overall, Low argues that debt financing is not only a practical solution for funding essential infrastructure projects but also a fair and efficient way to distribute costs across generations. By implementing a responsible borrowing framework, Hong Kong can ensure sustainable and beneficial development for decades to come.
