Standard & Poor's decision to upgrade the rating outlook for Hong Kong from 'stable' to 'positive' has been welcomed by the Government.

It reflects international recognition of the city's sound economic fundamentals and improved public finance and growth prospects. Standard & Poor's also affirmed the city's long-term foreign currency and long-term local currency ratings at 'A+' and 'AA-'.

The credit rating agency noted the economic upturn, renewed buoyancy in the property market and expected end to deflation are boosting Hong Kong's fiscal prospects. However, the city continues to suffer from a narrow revenue base, which is overly dependent on land and asset sales.

The agency suggested a goods-and-services tax or other broad-based tax to set public finances on firmer ground, though opposition to its introduction remains strong. Click here for details.

The Government said it is committed to consolidating Hong Kong's public finances with a broader revenue base and continued fiscal discipline.