The measures expand upon those announced in February's budget and take Hong Kong's stimulus spending to 87.6 billion dollars, around 5.2 percent of the territory's gross domestic product, said Financial Secretary John Tsang.

Tsang announced the relief package at a press conference in response to what he called the "severe challenges" faced by Hong Kong, including the economic impact of an outbreak of swine flu.

"The economic situation is rather dire," he said. "There is still a lot of uncertainty in terms of the economy around the world and in Hong Kong."

In the third quarter of 2008 Hong Kong tumbled into recession and in May the government slashed its forecast for this year, saying the economy would contract 5.5-6.5 percent, from a previous forecast of 2.0-3.0 percent.

Tsang said the 16.8-billion-dollar package, combined with previously announced measures, "would improve our GDP figure by about 2.0 percent" this year and predicted the economy would improve in the second half of the year.

However, he maintained the earlier government forecast for the contraction in GDP and did not rule out taking further action if needed.

The measures announced Tuesday include raising income tax rebates to 8,000 dollars a person from 6,000 dollars announced in February. Tsang said the move would cost around 2.0 billion dollars in lost tax revenue.

He also announced waivers on business registration fees and increased allowances for public housing tenants, students, the elderly and the disabled.

Property rates will be waived for up to two quarters, in addition to the two quarters planned for in February's budget, at a cost of around 4.2 billion dollars to the government, said Tsang.

"As a result, 90 percent of domestic properties and 60 percent of non-domestic properties will pay no rates for the entire year," he said.

The plans met a mixed response, with some critics arguing the package was insufficient.

Tuesday's measures were "too little, too late," Kevin Lai, senior economist at Daiwa Institute of Research, told Dow Jones Newswires.

"By now, the slowdown has spilled over to the domestic economy and thus the government needs to expand the size of the stimulus package to compensate for the lost time," said Lai.

He added the new spending measures should have been in the range of 40 billion to 80 billion dollars.

The chief executive of the Hong Kong Chamber of Commerce, Alex Fong, welcomed the plan's incentives for small businesses but said it was "limited."

"Although the supplementary measures are limited, the 8,000 dollar tax rebate and waiving rates for an additional two quarters will help keep some money in taxpayers' pockets," he said.

The export-dependent territory has been battered by its worst financial crisis since the Great Depression of the 1930s.

Gross domestic product tumbled at its fastest rate in a decade in the first quarter of this year, plunging 7.8 percent from a year earlier.

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