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Opinion – Uncertain outlook

According to the first available estimates, casino revenues stood between MOP100 billion and MOP200 million per day since they re-opened. That sure looks like a handsome amount of money, yet it is far below the levels we got used. Before the epidemics changed the tables, those revenues were flying at around MOP800 million per day, on average.

Gambling is possibly the activity with the highest potential for recovery, but a lot will depend on the shape we will find the mainland economy after the crisis is over.

At this point, we cannot fathom with any reasonable degree of confidence how long it may take for the situation to return to levels comparable to those existing before. And many activities will not return to some sense of normalcy until significant flows of visitors pick up again.

These levels of revenue and visitors will, if sustained for long, inflict acute pain to many local businesses. Not to mention that all this adds another layer of uncertainty to the final phase of the current gambling concessions, complicating both the operators’ business plans and the preparation for the coming negotiations.

On a different plan, let us not forget that gambling is the big feeder of the public coffers. The current condition suggests that it is believable, for the first time since the casino bonanza started, the region will run a deficit.

The laying of the golden eggs did not stop, but by year-end we are likely to find they have been smaller than usual. The financial reserve will be called into operation. It is just as well. These are the situations that justify the prudence of piling them up during good times.

The Secretary for the Economy admitted without much elaboration, that the deficit this year might amount to MOP40 billion.

Bearing in mind the final figures for the 2019 budget execution added up over 50 billion to the reserve (more than double the initial forecast), such state of affairs would not look too dramatic for the public finances.

But the budgeted surplus forecasted for this year stood above MOP20 billion, in rough numbers. Assuming the expected expenditure will see no decrease, and the reserves will support the additional spending, a MOP40 billion deficit might imply a government income some MOP60 billion below the budget, which is about half the forecast.

The economic contraction such estimate seems to suggest, even accounting for fiscal pardons, is surely not trivial.