Acting Financial Secretary Stephen Ip welcomes Standard & Poor's decision to upgrade its foreign currency and local currency rating outlooks on Hong Kong from "stable" to "positive".

It has also affirmed Hong Kong's long-term foreign currency and long-term local currency ratings at "AA-".

S&P noted an upgrade of the ratings on China, together with continued fiscal consolidation in Hong Kong, could lead to higher ratings on Hong Kong.

Mr Ip said the upgrade reflects international recognition of Hong Kong's strong economic fundamentals and improved public finances and growth prospects. It also showed the continuing improvements in Hong Kong's fiscal position.

"We are committed to consolidating Hong Kong's public finances further with continued fiscal discipline. We will also shortly be undertaking a public consultation exercise on broadening our revenue base through the introduction of a goods and services tax," Mr Ip said.

S&P last upgraded Hong Kong's long-term foreign currency rating from "A+/positive" to "AA-/stable" in July last year based on improved fiscal prospects, while the potential challenges that may arise from increased economic integration with the Mainland have been reduced.

S&P last raised Hong Kong's foreign currency outlook from "stable" to "positive" in May last year and Hong Kong's local currency rating outlook from "negative" to "stable" in June 2004.