Abstract
IMF Country Report No. 22/69
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IMF Country Report No. 22/69
PEOPLE’S REPUBLIC OF CHINA—HONG KONG SPECIAL ADMINISTRATIVE REGION
2022 ARTICLE IV CONSULTATION DISCUSSIONS— PRESS RELEASE; AND STAFF REPORT
March 2022
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. In the context of the 2022 Article IV consultation discussions with People’s Republic of China—Hong Kong Special Administrative Region, the following documents have been released and are included in this package:
A Press Release.
The Staff Report prepared by a staff team of the IMF for the Executive Board’s consideration on a lapse-of-time basis, following discussions that ended on December 15, 2021, with the officials of People’s Republic of China—Hong Kong Special Administrative Region on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on January 26, 2022.
An Informational Annex prepared by the IMF staff.
The document listed below has been or will be separately released.
Selected Issues
The IMF’s transparency policy allows for the deletion of market-sensitive information and premature disclosure of the authorities’ policy intentions in published staff reports and other documents.
Copies of this report are available to the public from
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© 2022 International Monetary Fund
Press Release
PR22/60
IMF Executive Board Concludes 2022 Article IV Consultation Discussions with the People’s Republic of China—Hong Kong Special Administrative Region
FOR IMMEDIATE RELEASE
Washington, DC – March 8, 2022: On February 10, 2022, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation discussions1 with the People’s Republic of China—Hong Kong Special Administrative Region (SAR), and considered and endorsed the staff appraisal without a meeting on a lapse-of-time basis.2
Hong Kong SAR’s economy is recovering strongly, with real activity increasing by 6.4 percent in 2021, as ample policy space allowed the enaction of swift and bold policy responses to address the unprecedented crisis emanating from multiple shocks, including the pandemic. In 2022, growth is expected to moderate to 3 percent, with a continued handoff from public to private demand facilitated by improving labor market conditions and a gradual re-opening of the border.
The financial system remains resilient supported by significant policy buffers, a strong external position, and strong institutional frameworks. Hong Kong SAR’s financial system has continued expanding robustly even during the pandemic while maintaining its role as a major international financial center. The Hong Kong dollar continues to trade in a smooth and orderly manner within the Convertibility Zone. Housing prices, which declined by less than 1 percent in 2020 in terms of average annual prices, have increased by about 4 percent as of November in 2021.
Nevertheless, the balance of risks is tilted to the downside. In particular, pandemic related uncertainty, including renewed local outbreaks led possibly by new variants, could lead to a slower resumption in the flow of people, further weakening the recovery in private consumption. A slower-than-expected global recovery and sustained disruptions to global supply chains could reduce the flow of goods and derail the recovery. A sharp rise in global risk premia and a disorderly tightening in the monetary policy of major advanced economies could affect the flow of capital. Ample policy buffers and the strong external position should, however, help mitigate the adverse impact on financial stability and economic growth: fiscal and FX reserves stood at about 30 and 135 percent of GDP, respectively, as of November 2021.
Executive Board Assessment
In concluding the 2022 Article IV consultation discussions with Hong Kong SAR, Executive Directors endorsed staff appraisal as follows:
Outlook. The economy has recovered strongly supported by swift and bold policy responses, notably a large fiscal stimulus. The financial sector has remained resilient on the back of significant policy buffers, a strong external position, and strong institutional frameworks. However, the recovery remains unbalanced with private consumption lagging. The economic recovery is projected to continue in 2022 with a handoff from public to private demand, facilitated by a moderating pace of fiscal consolidation and a gradual re-opening of the border.
Risks. The balance of risks is tilted to the downside. Pandemic-related uncertainty could delay the resumption in the flow of people. A slower-than-expected global recovery and sustained disruptions to global supply chains could reduce the flow of goods and derail the recovery. A sharp rise in global risk premia, a disorderly tightening of monetary policy in major advanced economies, large housing market corrections, escalating U.S.-China tensions, and a shift of market confidence in Hong Kong SAR’s status as a major international financial center could affect the flow of capital. Conversely, faster-than-expected border re-opening and global recovery and the development of the Greater Bay Area could improve growth prospects.
Fiscal policy. Fiscal policy should continue to support the recovery by returning to a balanced budget at a gradual pace, while focusing in the near term on providing more targeted support for low-income households, unemployed workers, and SMEs. Over the medium term, fiscal policy should strengthen its role as an automatic stabilizer and address structural challenges of population aging, high income inequality, and public housing shortage. A comprehensive tax reform that broadens the tax base while maintaining fairness and international competitiveness is needed to rebuild fiscal buffers.
Financial ties with Mainland China. The authorities should continue to strengthen systemic risk analysis of Mainland China-related credit risks, including by ensuring that the internal credit risk models used by Hong Kong SAR banks to determine the capital charges for exposures to Mainland Chinese borrowers, particularly those in the real estate sector with low credit ratings, are sufficiently forward-looking. Continued close monitoring of banks’ significant exposures to non-bank Mainland Chinese entities and a periodic stress test of banks’ large exposures—on top of the regular stress testing—would also help. As the financial ties are broadening to the cross-border use of the e-CNY in Hong Kong SAR, the potential implications from a more widely adopted e-CNY in Hong Kong SAR should be carefully studied.
Housing policies. The three-pronged approach—boosting housing supply, macroprudential measures, and stamp duties—to improving housing affordability and containing housing market risks remains valid. Housing supply should be increased, including by expanding land supply and expediting and streamlining the process for land identification and production. While the macroprudential stance for housing market should be maintained for now, the Council of Financial Regulators should take a lead in strengthening the regular surveillance and data collection on lending by non-bank lenders and the authorities should regularly assess the need to expand the regulatory perimeter to mitigate the leakages in macroprudential policies. The New Residential Stamp Duty, assessed to be a capital flow management measure and a macroprudential measure (CFM/MPM), should be phased out once systemic risks from non-resident inflows dissipate.
Financial sector policies. Financial policies should shift focus towards addressing solvency issues concerning corporates and individuals, as the recovery gains further momentum. The cut in the countercyclical capital buffer during the pandemic was appropriate but the Hong Kong Monetary Authority should stand ready to adjust it to the level consistent with updated systemic risk assessments. The ongoing efforts to further strengthen regulatory and supervisory frameworks are welcome, and further steps should be taken to enhance macroprudential oversight, including by adopting a more comprehensive and systematic approach to identify and address systemic risks. A consistent and cross-sectoral supervisory and regulatory framework is also critical to effectively address industry-wide fintech-related issues.
Exchange rate regime and external position. The Linked Exchange Rate System remains the appropriate arrangement as an anchor for economic and financial stability. The authorities should continue to preserve the rule of law and maintain the free flow of capital. Staff’s preliminary assessment suggests that the external position in 2021 was broadly in line with the level implied by medium-term fundamentals and desirable policies.
Climate change. The updated action plan to achieve carbon neutrality before 2050 is welcome. To complement ongoing efforts, the government could consider introducing additional carbon pricing mechanisms to incentivize energy saving and green transportation. Climate-related risks should be carefully monitored and assessed by strengthening systemic risk analysis. Hong Kong SAR should play a key role in global efforts to mobilize private investment for green development by enhancing the green and sustainable finance ecosystem.
Hong Kong SAR: Selected Economic Indicators, 2017–26
Before issuance and repayment of government bonds and notes.
Based on loans for use in Hong Kong SAR, including trade financing.
Actual values for 2021.
Hong Kong SAR: Selected Economic Indicators, 2017–26
| Proj. | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | ||
| NATIONAL ACCOUNTS | |||||||||||
| Real GDP (percent change) | 3.8 | 2.8 | -1.7 | -6.1 | 6.4 | 3.0 | 3.0 | 2.9 | 2.8 | 2.8 | |
| Private consumption | 5.5 | 5.3 | -0.8 | -9.9 | 6.2 | 4.8 | 4.8 | 4.6 | 4.3 | 4.1 | |
| Government consumption | 2.8 | 4.2 | 5.1 | 8.1 | 4.0 | 0.6 | 2.0 | 2.3 | 2.3 | 2.3 | |
| Gross fixed capital formation | 3.1 | 1.7 | -14.9 | -11.2 | 12.1 | 10.3 | 4.2 | 3.0 | 3.0 | 3.0 | |
| Inventories (contribution to growth) | 0.4 | 0.0 | -0.5 | 1.7 | -0.1 | -0.3 | -0.3 | -0.3 | -0.3 | -0.1 | |
| Net exports (contribution to growth) | -1.2 | -1.5 | 2.1 | 0.3 | -0.2 | -1.9 | -0.9 | -0.8 | -0.8 | -0.8 | |
| Output gap (in percent of potential GDP) | 0.1 | 0.1 | -2.5 | -6.8 | -1.9 | -1.2 | -0.8 | -0.5 | -0.3 | -0.1 | |
| LABOR MARKET | |||||||||||
| Employment (percent change) | 1.0 | 1.1 | -0.4 | -4.9 | -0.2 | 2.0 | 0.5 | 0.6 | 0.7 | 0.7 | |
| Unemployment rate (percent, period average) | 3.1 | 2.8 | 2.9 | 5.8 | 5.2 | 3.5 | 3.3 | 3.2 | 3.1 | 3.0 | |
| Real wages (percent change) | 2.3 | 1.0 | 0.1 | 2.5 | 0.8 | 1.1 | 1.2 | 1.3 | 1.3 | 1.3 | |
| PRICES | |||||||||||
| Inflation (percent change) | |||||||||||
| Consumer prices 3/ | 1.5 | 2.4 | 2.9 | 0.3 | 1.6 | 2.1 | 2.3 | 2.4 | 2.5 | 2.5 | |
| GDP deflator | 2.9 | 3.7 | 2.0 | 0.6 | 0.2 | 2.0 | 2.1 | 2.2 | 2.3 | 2.3 | |
| GENERAL GOVERNMENT | |||||||||||
| Consolidated budget balance (percent of GDP) 1/ | 5.6 | 2.4 | -0.6 | -9.4 | -3.7 | -2.2 | -1.5 | -1.1 | -0.7 | -0.7 | |
| Revenue | 23.3 | 21.2 | 20.8 | 21.0 | 21.6 | 21.7 | 21.9 | 21.8 | 22.0 | 22.0 | |
| Expenditure | 17.7 | 18.8 | 21.4 | 30.4 | 25.3 | 23.9 | 23.3 | 23.0 | 22.7 | 22.7 | |
| Fiscal reserves (as of end-March, percent of GDP) | 41.5 | 41.3 | 40.8 | 34.5 | 29.9 | 27.4 | 25.7 | 24.1 | 23.0 | 22.0 | |
| FINANCIAL | |||||||||||
| Interest rates (percent, period average) 3/ | |||||||||||
| Best lending rate | 5.0 | 5.0 | 5.1 | 5.0 | 5.0 | ... | ... | ... | ... | ... | |
| Three-month HIBOR | 0.9 | 1.8 | 2.1 | 1.1 | 0.2 | ... | ... | ... | ... | ... | |
| 10-year Treasury bond yield | 1.6 | 2.2 | 1.6 | 0.8 | 1.2 | ... | ... | ... | ... | ... | |
| MACRO-FINANCIAL | |||||||||||
| Loans for use in Hong Kong SAR (excl. trade financing) | 16.1 | 6.5 | 7.7 | 2.1 | 8.4 | 10.3 | 8.6 | 8.0 | 7.7 | 7.7 | |
| House prices (year-on-year percent change for last quarter) | 13.7 | 5.8 | 3.4 | -0.1 | 3.0 | 5.8 | 7.1 | 7.4 | 7.6 | 7.6 | |
| Credit-to-GDP gap 2/ | 20.6 | 12.5 | 21.2 | 23.9 | 11.5 | 12.2 | 9.6 | 6.2 | 2.7 | 0.0 | |
| Hang Seng stock index (percent change) 3/ | 36.0 | -13.6 | 9.1 | -3.4 | -14.1 | ... | ... | ... | ... | ... | |
| EXTERNAL SECTOR | |||||||||||
| Merchandise trade (percent change) | |||||||||||
| Export value | 8.0 | 7.3 | -4.1 | -1.5 | 18.3 | 5.0 | 3.8 | 3.7 | 3.7 | 3.7 | |
| Import value | 8.7 | 8.4 | -6.5 | -3.3 | 18.4 | 5.5 | 4.2 | 4.1 | 4.1 | 4.1 | |
| Current account balance (percent of GDP) | 4.6 | 3.7 | 5.8 | 6.9 | 7.5 | 6.7 | 5.5 | 5.0 | 4.6 | 4.0 | |
| Foreign exchange reserves | |||||||||||
| In billions of U.S. dollars (end-of-period) | 431 | 425 | 441 | 492 | 500 | 508 | 516 | 525 | 537 | 553 | |
| In percent of GDP | 126 | 117 | 122 | 142 | 135 | 131 | 126 | 122 | 119 | 116 | |
| Net international investment position (percent of GDP) | 418 | 354 | 432 | 612 | 581 | 560 | 538 | 517 | 496 | 476 | |
| Exchange rate 3/ | |||||||||||
| Market rate (HK$/US$, period average) | 7.793 | 7.839 | 7.836 | 7.757 | 7.773 | … | … | … | … | … | |
| Real effective rate (period average, 2010=100) | 115.3 | 113.1 | 117.7 | 116.9 | 111.6 | … | … | … | … | … | |
Before issuance and repayment of government bonds and notes.
Based on loans for use in Hong Kong SAR, including trade financing.
Actual values for 2021.
Hong Kong SAR: Selected Economic Indicators, 2017–26
| Proj. | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | ||
| NATIONAL ACCOUNTS | |||||||||||
| Real GDP (percent change) | 3.8 | 2.8 | -1.7 | -6.1 | 6.4 | 3.0 | 3.0 | 2.9 | 2.8 | 2.8 | |
| Private consumption | 5.5 | 5.3 | -0.8 | -9.9 | 6.2 | 4.8 | 4.8 | 4.6 | 4.3 | 4.1 | |
| Government consumption | 2.8 | 4.2 | 5.1 | 8.1 | 4.0 | 0.6 | 2.0 | 2.3 | 2.3 | 2.3 | |
| Gross fixed capital formation | 3.1 | 1.7 | -14.9 | -11.2 | 12.1 | 10.3 | 4.2 | 3.0 | 3.0 | 3.0 | |
| Inventories (contribution to growth) | 0.4 | 0.0 | -0.5 | 1.7 | -0.1 | -0.3 | -0.3 | -0.3 | -0.3 | -0.1 | |
| Net exports (contribution to growth) | -1.2 | -1.5 | 2.1 | 0.3 | -0.2 | -1.9 | -0.9 | -0.8 | -0.8 | -0.8 | |
| Output gap (in percent of potential GDP) | 0.1 | 0.1 | -2.5 | -6.8 | -1.9 | -1.2 | -0.8 | -0.5 | -0.3 | -0.1 | |
| LABOR MARKET | |||||||||||
| Employment (percent change) | 1.0 | 1.1 | -0.4 | -4.9 | -0.2 | 2.0 | 0.5 | 0.6 | 0.7 | 0.7 | |
| Unemployment rate (percent, period average) | 3.1 | 2.8 | 2.9 | 5.8 | 5.2 | 3.5 | 3.3 | 3.2 | 3.1 | 3.0 | |
| Real wages (percent change) | 2.3 | 1.0 | 0.1 | 2.5 | 0.8 | 1.1 | 1.2 | 1.3 | 1.3 | 1.3 | |
| PRICES | |||||||||||
| Inflation (percent change) | |||||||||||
| Consumer prices 3/ | 1.5 | 2.4 | 2.9 | 0.3 | 1.6 | 2.1 | 2.3 | 2.4 | 2.5 | 2.5 | |
| GDP deflator | 2.9 | 3.7 | 2.0 | 0.6 | 0.2 | 2.0 | 2.1 | 2.2 | 2.3 | 2.3 | |
| GENERAL GOVERNMENT | |||||||||||
| Consolidated budget balance (percent of GDP) 1/ | 5.6 | 2.4 | -0.6 | -9.4 | -3.7 | -2.2 | -1.5 | -1.1 | -0.7 | -0.7 | |
| Revenue | 23.3 | 21.2 | 20.8 | 21.0 | 21.6 | 21.7 | 21.9 | 21.8 | 22.0 | 22.0 | |
| Expenditure | 17.7 | 18.8 | 21.4 | 30.4 | 25.3 | 23.9 | 23.3 | 23.0 | 22.7 | 22.7 | |
| Fiscal reserves (as of end-March, percent of GDP) | 41.5 | 41.3 | 40.8 | 34.5 | 29.9 | 27.4 | 25.7 | 24.1 | 23.0 | 22.0 | |
| FINANCIAL | |||||||||||
| Interest rates (percent, period average) 3/ | |||||||||||
| Best lending rate | 5.0 | 5.0 | 5.1 | 5.0 | 5.0 | ... | ... | ... | ... | ... | |
| Three-month HIBOR | 0.9 | 1.8 | 2.1 | 1.1 | 0.2 | ... | ... | ... | ... | ... | |
| 10-year Treasury bond yield | 1.6 | 2.2 | 1.6 | 0.8 | 1.2 | ... | ... | ... | ... | ... | |
| MACRO-FINANCIAL | |||||||||||
| Loans for use in Hong Kong SAR (excl. trade financing) | 16.1 | 6.5 | 7.7 | 2.1 | 8.4 | 10.3 | 8.6 | 8.0 | 7.7 | 7.7 | |
| House prices (year-on-year percent change for last quarter) | 13.7 | 5.8 | 3.4 | -0.1 | 3.0 | 5.8 | 7.1 | 7.4 | 7.6 | 7.6 | |
| Credit-to-GDP gap 2/ | 20.6 | 12.5 | 21.2 | 23.9 | 11.5 | 12.2 | 9.6 | 6.2 | 2.7 | 0.0 | |
| Hang Seng stock index (percent change) 3/ | 36.0 | -13.6 | 9.1 | -3.4 | -14.1 | ... | ... | ... | ... | ... | |
| EXTERNAL SECTOR | |||||||||||
| Merchandise trade (percent change) | |||||||||||
| Export value | 8.0 | 7.3 | -4.1 | -1.5 | 18.3 | 5.0 | 3.8 | 3.7 | 3.7 | 3.7 | |
| Import value | 8.7 | 8.4 | -6.5 | -3.3 | 18.4 | 5.5 | 4.2 | 4.1 | 4.1 | 4.1 | |
| Current account balance (percent of GDP) | 4.6 | 3.7 | 5.8 | 6.9 | 7.5 | 6.7 | 5.5 | 5.0 | 4.6 | 4.0 | |
| Foreign exchange reserves | |||||||||||
| In billions of U.S. dollars (end-of-period) | 431 | 425 | 441 | 492 | 500 | 508 | 516 | 525 | 537 | 553 | |
| In percent of GDP | 126 | 117 | 122 | 142 | 135 | 131 | 126 | 122 | 119 | 116 | |
| Net international investment position (percent of GDP) | 418 | 354 | 432 | 612 | 581 | 560 | 538 | 517 | 496 | 476 | |
| Exchange rate 3/ | |||||||||||
| Market rate (HK$/US$, period average) | 7.793 | 7.839 | 7.836 | 7.757 | 7.773 | … | … | … | … | … | |
| Real effective rate (period average, 2010=100) | 115.3 | 113.1 | 117.7 | 116.9 | 111.6 | … | … | … | … | … | |
Before issuance and repayment of government bonds and notes.
Based on loans for use in Hong Kong SAR, including trade financing.
Actual values for 2021.
Title page
PEOPLE’S REPUBLIC OF CHINA—HONG KONG SPECIAL ADMINISTRATIVE REGION
STAFF REPORT FOR THE 2022 ARTICLE IV CONSULTATION DISCUSSIONS
January 26, 2022
KEY ISSUES
Overview. Hong Kong SAR’s economy is recovering strongly as ample policy space has allowed the enaction of swift and bold policy responses to address the unprecedented crisis emanating from multiple shocks, including notably the pandemic. But the recovery remains uneven, with private consumption lagging, owing, in part, to a zero-COVID tolerance approach. The financial sector has remained resilient supported by significant buffers, strong institutional frameworks, and a well-functioning Linked Exchange Rate System (LERS). Increasing financial linkages with Mainland China bring both opportunities and challenges for growth and financial stability.
The policy strategy to secure a balanced recovery and maintain the Hong Kong SAR’s competitiveness as an international financial center (IFC) includes:
• Promoting inclusive growth. With slack remaining in the economy, fiscal consolidation should be gradual, but policy should shift focus towards providing targeted support for vulnerable households and businesses. Additional support through social safety nets, public housing and infrastructure, and job retraining will help promote inclusive growth and the transition to a new normal post-COVID.
• Safeguarding financial stability. The high-quality regulatory and supervisory frameworks should be further strengthened to contain macro-financial risks, notably from extensive linkages with Mainland China. The three-pronged approach—boosting housing supply, macroprudential measures, and stamp duties—should continue to address the structural supply-demand imbalance in the housing market and associated risks. The LERS remains appropriate and should be maintained as an anchor for economic and financial stability. The authorities should preserve the rule of law to maintain the solid foundation for the financial sector’s competitiveness.
• Managing climate-related risks while leveraging green finance. Climate-related risks should be carefully monitored and assessed by strengthening the systemic risk analysis. Fostering a green and sustainable finance ecosystem will strengthen Hong Kong SAR’s position as a hub for green finance and support global efforts to mobilize private sector investment for green development.
Approved By
Krishna Srinivasan and Guillaume Chabert
Discussions took place virtually during December 1–15, 2021. The team included Joong Shik Kang (head), Fei Han, Yu Ching Wong (all APD), and Phakawa Jeasakul (Resident Representative, MCM). Krishna Srinivasan (APD) and Prasad Ananthakrishnan (MCM) joined the concluding meetings. The mission met Financial Secretary Paul Chan, HKMA Chief Executive Eddie Yue, and other senior officials. Zhongxia Jin, Zhengxin Zhang and Michael Law (all OED) joined the official meetings. Pablo Gonzalez Dominguez, Alessandra Balestieri (all APD), Daisy Wong (COM), Atis Lee, and Hong Xiao (Resident Representative Office) provided support to the mission.
Contents
NAVIGATING MULTIPLE SHOCKS
FROM STRONG RECOVERY TO SUSTAINABLE GROWTH
A. A Strong but Unbalanced Recovery
B. Handoff to Private Demand with Challenges Ahead
SUPPORTING BALANCED AND INCLUSIVE GROWTH
A. Adjusting Macroeconomic Policy to the Pace of the Recovery
B. Strengthening Productivity and Competitiveness
SAFEGUARDING FINANCIAL STABILITY
A. Opportunities and Challenges from Rising Ties with Mainland China
B. Strengthening Resilience to Global Risk Sentiment
C. Containing Housing Market Risks
D. Further Enhancing Regulatory and Supervisory Frameworks
SEIZING OPPORTUNITIES FOR A GREENER ECONOMY
STAFF APPRAISAL
BOXES
1. Electronic Consumption Voucher
2. Recent Developments in Central Bank Digital Currencies in Hong Kong SAR
FIGURES
1. A Strong yet Uneven Recovery
2. Large Fiscal Stimulus During the Pandemic
3. High Financial Vulnerabilities Amid Increased Leverage
4. Strong Banking System with Large Buffers
5. Increasing Financial Linkages with Mainland China
6. Smooth Functioning of The Linked Exchange Rate System
7. Further Worsening of Housing Affordability
TABLES
1. Selected Economic and Financial Indicators, 2017–26
2. Balance of Payments, 2017–26
3. Consolidated Government Account, 2017–26
4. Monetary Survey, 2017–22
5. Financial Soundness Indicators, 2017–21Q3
APPENDICES
I. Divergence in the Labor Market
II. External Sector Assessment
III. Risk Assessment Matrix
IV. Debt Sustainability Analysis
V. Unemployment Benefits
VI. Potential Impact of Global Tax Reforms
VII. Summary of Property Market Measures Introduced Since 2009
VIII. Implementation of the 2021 FSAP Recommendations
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country’s economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.
The Executive Board takes decisions under its lapse-of-time procedure when the Board agrees that a proposal can be considered without convening formal discussions.
