Macau could face a defecit of MOP48 billion ($5.99 billion) in 2020, according to the University of Macau Chair Professor in Accounting and Finance Jean Chen. Her assessment matches one previously provided by Secretary for Economy and Finance Lei Wai Nong last week.
This, of course, is due to decreases in revenue at casino concessionaires, who have already seen sharp declines in gross gaming revenues (GGR). To alleviate the economic impact of this downturn, it’s expected the government will have to step up and support struggling businesses.
In a statement provided by the economist, she explained:
“This kind of dramatic change due to unexpected emergency is not necessarily leading to a long-term drop in revenue. A temporary deficit is normal for any country suffering from some dramatic events […] A careful cost-benefit analysis is necessary rather than one single indicator.”
Secretary Lei has already been taking steps to try to assist the local economy. In January, before the full impact of Covid-19 was felt, he ordered that the annual check be brought forward into April to help Macau recover from the impact of the outbreak. Each permanent resident would receive a check in the amount of 10,000 patacas ($1,250) while non-permanent residents will receive 6,000 patacas ($750). This was expected to cost the government an estimated 7.1 billion patacas ($887.5 million).
Resort-casinos, have been facing putrid revenues through the first two months of this year. In January, revenues saw a modest decline, but they bottomed out in February, as gaming revenue dropped by 87.8% as compared to the same month in 2019. This was due in large part to a 15-day mandatory shutdown of all casino operations.
Now financial experts are expecting that as the epidemic continues, it will drive revenues even further down. One financial expert noted that the tourism and service focused regions, such as MICE, catering, retail, tourism, casino, taxi, and Real Estate, have been affected most by the outbreak, as they have seen a drop in revenues of between 60% and 95%.
“Around 35,000 SMEs [small-and-medium enterprises] which account for more than 95 percent of the firms in Macau are very much related to the service industry, and thus have been suffering badly during this very difficult time,” Professor Chen pointed out.
Right now, the government is focused on trying to assist local residents during this time. They have announced several financial support measures including providing MOP2.2 billion in individual consumer vouchers, tax breaks and reductions, plus credit guarantees for SME bank loans.