In a release captioned ‘People's Republic of China-Hong Kong Special Administrative Region-Preliminary Conclusions of the 2014 Article IV Mission' IMF stated that “Fund staff supports casting fiscal policy in a long-term framework, as done by the recent Working Group on Long-Term Fiscal Planning, to help anchor the discussion about how to balance spending to address aging and inequality, preserving low taxes, and the necessity of maintaining fiscal prudence.”

In line with the improved economic outlook, the 2014/15 budget has an appropriate unwinding of stimulus, including a reduction in one-off measures, it added.

IMF staff believes that there may be scope to strengthen social programs through a reprioritization of spending and efficiency gains in existing programs.

The release notes that “Fiscal prudence is a cornerstone of the policy framework that has been so important to Hong Kong SAR's resilience and success.”

The IMF's Financial Sector Assessment Program (FSAP) conducted in 2013-14 finds that Hong Kong SAR's financial system is well regulated and supervised-at the global forefront in many areas-in line with the needs of a major global financial center and resilient to likely shocks.

The FSAP stress tests conclude that the banking system is well positioned to absorb losses in adverse scenarios, which combine lower domestic and global growth, including in China, with higher U.S. interest rates and asset price shocks. The banking system is also resilient to changes in liquidity conditions.

Taking note of Honk Kong's banks growing credit exposure to the mainland China, IMF staff has concluded that “the large exposure requires close monitoring and cooperation with Mainland supervisors.”