DEEP POCKETS

2014/12/5

From：Macau Business Daily

The Macau Government has been frugal. It has enough ‘financial savings’ to last 12 months. That’s more than 100 of the 187 economies tracked by the IMF can claim. Gaming revenues may have plunged for six consecutive months but the city’s surplus could still reach MOP100 billion this year

Every personal finance advisor will tell you that it is good to have at least six months’ worth of your salary in the bank in order to protect you against headwinds like unemployment or other unexpected calamities. In the case of Macau, the government has not six but a full year of ‘salary’ in the bank. The territory could simply take a breather for a whole year without the need to borrow money.
The same personal finance advisor will call Macau an ultra cautious client. For most governments this would be a dream-like scenario: no public debt and enough cash to take a gap year.
According to the report of the Legislative Assembly (AL) on the 2013 budget execution rate, the government’s ‘financial savings’ last year amounted to MOP393.7 billion, a sum equal to 95 per cent of Macau’s Gross Domestic Product (GDP). The ‘financial savings’ are basically all the money that authorities have in its coffers, like the cash people have in a bank. For the government here it includes all the fiscal surpluses that the Treasury and the Monetary Authority of Macau (AMCM) have accumulated.
While most countries struggle to reduce their public deficit, what Macau has in its deep pockets is more than 100 of the 187 countries tracked by the International Monetary Fund (IMF). Yes, Macau’s ‘savings’ are greater than the economies of Costa Rica, Slovenia, Tunisia, Nepal or Cambodia, to name but a few.
According to the AL report, the government money is spread in three main areas. The Treasury has MOP169 billion, AMCM has MOP54 billion to manage the city’s exchange currency and Macau’s financial reserve the remaining MOP169 billion (also managed by AMCM).
The booming years of the gaming industry in Macau made the government richer than ever. In only four years, between 2010 and 2013, government ‘savings’ doubled. In 2010, they amounted to MOP153 billion, around 67 per cent of GDP, now they are almost MOP400 billion. In only one year, from 2012 to 2013, Macau’s ‘financial savings’ increased by MOP100 billion, the AL report says.
This year, despite the record drop in gaming revenues during the second half, the fiscal surplus could reach MOP100 billion, meaning an extra injection for the public finances into Macau. According to Financial Services Bureau data, the fiscal surplus this year until October amounted to MOP85 billion. With two months left to close the year – seeing how the November figures aren’t out yet – this sum could reach MOP100 billion. This means that Macau’s ‘financial savings’ could top almost MOP500 billion.

Copyright@Macau Business