Hong Kong  - A raft of measures including permanent cuts in salary and corporate taxes and investment in infrastructure have been proposed by the International Monetary Fund as a way of stimulating demand in Hong Kong, the government said Tuesday.

"Well targeted infrastructure investments should boost the economy's potential by further increasing skill levels and productivity," IMF directors said in a report on Hong Kong's economy.

They saw expansion of communications and infrastructure aimed at better integrating Hong Kong and the Pearl River delta region as an important catalyst for future growth and development.

Commenting on the IMF report, Hong Kong Finance Minister John Tsang said, "We will continue to implement necessary measures to help those in need during this difficult period."

The directors said the key risk facing Hong Kong was a possible worsening of turbulence in the international financial markets.

As a result, Hong Kong's economic growth is expected to fall noticeably in the coming months with 2 per cent growth in GDP forecast in 2009, down from 3.7 per cent this year. This compared with a 6.4 per cent rise in GDP in 2007.

Publication of the IMF directors' comments follows plans by the Hong Kong government to provide up to 100 billion Hong Kong dollars (12.8 billion dollars) in loan guarantees to non-listed companies next year.

The package, announced late Monday, also included the creation of more than 60,000 jobs in a government effort to lead Hong Kong out of the economic downturn.

This came as latest figures show the territory's foreign currency reserves reached 165.9 billion dollars at the end of November, up from 154.8 billion dollars a month earlier. (dpa)