Gov’t resorts to financial reserve again to balance budget

The Macau government announced today (Wednesday) that it will resort to the financial reserve again to meet the increase in expenditure in the SAR’s budget, which remains practically paralyzed due to policies to fight the pandemic.

Since the beginning of the pandemic in 2020, local authorities have already injected MOP84.5 billion (US$1 billion) to cover the public budget expenditures.

The bill, announced today at a press conference by the Executive Council – which was urgently submitted to the Legislative Assembly – provides for the increase in budget expenditure in the amount of MOP2.3 billion.

This new amendment is intended to cover the expenses of eight measures aimed at maintaining the survival of commercial establishments and ensuring employment, announced on October 11.

The total amount of expenditure under the integrated regular budget is thus increased from MOP103.5 billion to MOP105.8 billion.

During today’s press conference, the spokesman for the Executive Council, André Cheong, explained that these measures will benefit 100,000 employees of around 15,000 small and medium-sized companies in Macau.

In April, the Macau Government had already gone to the public purse to seek MOP9.1 billion, with the first budget for 2021 already contemplating the extraordinary injection of MOP26.6 billion.

In total, MOP37.9 billion have already been injected to make up for the increase in expenses and the reduction in income in 2021.

In the previous year, in 2020, when the pandemic began, the Government had used, for the first time, funds from the financial reserve, in the amount of MOP46.6 billion.

Even so, according to the latest official data, the financial reserve in Macau in 2020 was MOP616.12 billion “of which the basic reserve represented MOP146.6 billion and the extraordinary reserve MOP469.52 billion”.

On October 12, the International Monetary Fund (IMF) revised its forecast for economic growth in Macau in 2021 downwards, going now to 20.4 per cent after a 61.2 per cent prediction in April.

In April, when the IMF made the first forecast for 2021, most official data and government expectations pointed to a gradual growth in tourism in the territory and subsequently to the growth of casino revenues in the world’s gaming capital, virtually the only driver Macau’s economy.

However, tourism and gambling spending seem to be slow to rise. In September, for example, the gaming industry in Macau registered the second-worst result of the year, with the impacts of the epidemic measures imposed by the Government being felt immediately, after having registered about a dozen cases in the territory.

About a month ago, the head of the Macau Government, Ho Iat Seng, recalled that the initial estimate of taxes this year on Macau’s casino revenues “had already been conservative”, but that the detection of cases in August and in September ended up dashing short-term hopes for a recovery.

For this year, the Macau government expected to collect around MOP50 billion in gaming taxes.

Macau is one of the only territories in the world that continues to pursue a zero-case policy. Since the beginning of the pandemic, the territory has registered only 77 cases of the disease.

Entrance into Macau, from outside mainland China, is not restricted to residents only, and even these residents must undergo at least 21 days of mandatory quarantine inside a hotel room, even if they are vaccinated and test negative.

In addition to all these impositions, Macau residents who have had covid-19 and wish to return to the territory can only do so two months after the onset of the disease or the first positive test.