The Hong Kong Special Administrative Region (HKSAR) government on Wednesday said it will allocate some HK$47.5 billion (about $6 billion) to help fight COVID-19 in the new financial year.

Fighting COVID-19 is the top priority at present, and the HKSAR government will mobilize all available forces and resources to fight the pandemic, said Paul Chan, financial secretary of the HKSAR government, in the 2022-23 budget speech.

About HK$22 billion will be used to strengthen COVID-19 testing capacity and support the HKSAR Hospital Authority.

HK$6 billion will go to the HKSAR Department of Health for purchasing booster vaccine doses for residents, and nearly HK$7 billion will be earmarked to related departments for buying protective equipment and implementing COVID-19 preventive measures.

A total of HK$500 million will be allocated to the HKSAR Food and Environment Hygiene Department in two years for improving environmental hygiene services in the city.

HK$12 billion will be injected into the city's anti-epidemic fund for the construction of needed facilities.

In addition, Chan said another HK$20 billion have been set aside for other potential anti-epidemic needs.

"We will provide full support to fight the epidemic should more resources be required," he said in the speech via video link to members of the Legislative Council.

Hong Kong on Wednesday reported a record 8,674 COVID-19 infections in the past 24 hours, as the city prepares for compulsory testing of its residents after authorities extended the toughest social restrictions imposed since the pandemic surged.

Local health authorities reported 24 new deaths compared with 32 deaths recorded on Tuesday, as they step up measures, with assistance from the mainland, to curb the surge.

Fiscal measures to support the economy

The HKSAR government will also offer tax breaks, handouts and subsidies to small businesses and residents to mitigate the impact of the most stringent social restrictions imposed in the city to curb the spread of COVID-19, Chan said.

"Hong Kong is currently experiencing its hardest time in the fight against the epidemic, and we are facing enormous challenges," Chan told legislators.

"During this critical juncture of fighting the epidemic, we must take all necessary measures to preserve the vitality of the economy, in particular the survival of SMEs [small and medium-sized enterprises], and strive to safeguard jobs," he said.

"Counter-cyclical measures" in the budget to support the economy totaled more than HK$170 billion, he added. 

The fiscal measures announced on Wednesday include a 100 percent reduction in salaries tax, capped at HK$10,000, handouts of HK$10,000 consumption vouchers to qualified residents, financial aid for the unemployed and subsidies for directly impacted businesses.

Residents will also be given tax deductions related to their rent payments, as well as subsidies for transport and utilities.

A 100 percent reduction in profits tax capped at HK$10,000 is expected to benefit 151,000 firms, Chan said. In addition, the government will help small firms with loan guarantees, export financing and debt repayment holidays.

New legislation will be introduced to prevent landlords from terminating rental contracts of struggling small firms for up to six months.

Funds worth HK$1.26 billion will be given to firms in the tourism industry, reeling from two years of inactivity with no near-term prospects of recovery.

Hong Kong's economy is expected to grow 2 percent to 3.5 percent this year after expanding 6.4 percent in 2021, Chan said, adding the forecast takes into account a recovery in the second part of the year once the epidemic is brought under control.

"The successful control of the epidemic is the key to safeguarding our economy and people's livelihood," Chan said.

(With input from agencies)