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Moody's has upgraded Hong Kong's domestic currency government bond rating outlook from stable to positive. It will also review its long-term foreign currency bond rating on Hong Kong for possible upgrade.
Financial Secretary Henry Tang welcomed the moves, adding the decisions show the agency's recognition of Hong Kong's strong economic fundamentals and improved public finances and growth prospects.
"We are committed to consolidating Hong Kong's public finances further with continued fiscal discipline. We will also be shortly launching a public consultation on the introduction of a goods and services tax in Hong Kong," Mr Tang said.
Moody's said Hong Kong's fiscal and external indicators have strengthened, showing Hong Kong has a larger cushion against any potential shocks emanating from the Mainland.
The decision to place Hong Kong's foreign currency bond rating on review for possible upgrade was prompted by Moody's belief that the foreign and domestic currency bond ratings should probably be identical, especially in jurisdictions with currency boards.
Moody's last rating action on Hong Kong was in October, 2003, when it raised Hong Kong's long-term foreign currency rating two notches from A3 to A1, and with a stable outlook. The domestic currency government bond rating was Aa3, also with a stable outlook.
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