Hong Kong to offer all unemployed people near interest-free loans

Hong Kong is planning to offer near-interest free loans to as many as 250,000 unemployed persons to help those who lost work amid the pandemic and support the embattled economy.

The announcement for this one-off scheme is expected to be made on Wednesday by Hong Kong’s financial secretary Paul Chan Mo-po in his budget speech.

For the scheme, the government is going to set aside HK$10bn (£915m) for the loans capped at HK$ 80,000 (£7,300) at an annual interest rate of one per cent, reported the South China Morning Post quoting sources.

The move is expected to help thousands of people who lost work during Covid-19, resulting in the city’s unemployment rate touching seven per cent, which is close to a 17-year high.

But for the scheme, those seeking these loans would need to prove to the bank that they have been out of work for months. The scheme is not a long term measure and would be open for less than a year.

The news report stated that under the scheme, those who repay the money within the next five years would get the interest back at the end.

The government believes the scheme is not risky as those failing to return will have a poor credit record undermining the possibilities of any future loans to them.

The Hong Kong government is not looking at cash handouts to help thousands affected by the Covid-19 related losses.

Michael Luk Chung-hung, a pro-establishment lawmaker who represents the Federation of Trade Unions, expressed disappointment as they had collected over 80,000 signatures for a petition asking the government to set up a fund for the unemployed.

Though he noted that a “low-interest [loan] scheme is better than nothing” he stated that they would wait to see the finer details of the loan process.

Carol Ng Man-yee, chairwoman of the confederation of trade unions, called the planned scheme detached from reality but noted that details of the proposed loan scheme are yet to be seen.

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