Hong Kong Financial Secretary Henry Tang said on Tuesday the International Monetary Fund (IMF)'s positive assessment was an endorsement of the macroeconomic management of the Hong Kong Special Administrative Region (HKSAR) government.

"I am confident that Hong Kong, with its sound fundamentals and stable policy framework, will continue to maintain its competitiveness and resilience," said Henry Tang while responding to a IMF report published on Tuesday.

The IMF, in its Staff Report on Hong Kong, has given a positive assessment of Hong Kong's economic performance.

According to a government press release, the IMF commends the HKSAR government's fiscal and exchange rate polices.

The IMF projects the Hong Kong economy to have grown by 7 percent in 2005, which is in line with the latest government projection.

For 2006, HK's real gross domestic product (GDP) growth is expected to moderate to 5.5 percent, with some easing of external demand. Inflation is expected to rise modestly to 1.5 percent in 2006 from 1.1 percent in 2005, said the IMF report.

With the recent upturn in domestic prices, the IMF believes that adjustment of the economy to the adverse shocks of the past seven years may finally be over, and that external competitiveness has been restored to a level that is consistent with economic fundamentals.

Projecting a budget balance in the financial year 2005-06, the IMF believes that this is now a good time to develop a longer-term fiscal strategy to meet the challenges of an aging population.

The IMF welcomes the initiatives undertaken to strengthen Hong Kong's financial market infrastructure and supervisory systems. It also welcomes progress made on the introduction of a deposit protection scheme, preparations for adopting Basel II by banks and the establishment of the Financial Reporting Council.

On maintaining Hong Kong's status as an international financial center, Chief Executive of the Hong Kong Monetary Authority Joseph Yam said efforts over the past years to encourage the Chinese mainland to make greater use of Hong Kong's sophisticated financial platform would consolidate and enhance Hong Kong's position as the pre-eminent financial center for the Chinese mainland.

The IMF mission visited Hong Kong between Oct. 13 - 25 last year to conduct the Article IV Consultation.

Source: Xinhua