The Macau government has halved its forecast for the city’s casino gross gaming revenue (GGR) in full-year 2020, due to the negative impact of the Covid-19 pandemic on the local economy, in particular the gaming industry. Such forecast for this year is now MOP130 billion (US$16.3 billion), down from a projection of MOP260 billion, announced in November.
The new forecast was included in a revised 2020 budget plan announced by the local authorities on Thursday. The proposal needs to be approved by the city’s Legislative Assembly.
The government is usually conservative in its annual forecasts on casino GGR, typically underestimating the eventual tallies by a wide margin. Based on the government’s revised forecast, the annual GGR tally for 2020 would decline by 55.5 percent, compared to the MOP292.46 billion achieved last year. The 2019 tally was down 3.4 percent from the prior year, according to official data.
The Macau government has been implementing a number of measures to stem the spread of a novel coronavirus that causes the disease Covid-19, a global public health threat that had now reached pandemic proportions. Such measures involved the closure of the city’s casinos for a 15-day period in February and, more recently, an entry ban on everyone coming from overseas countries.
Macau’s casino industry recorded MOP3.1 billion in GGR for February, down 87.8 percent from the prior-year period, according to official data. Last month’s result puts the market’s accumulated 2020 year-on-year decline at 49.9 percent, to MOP25.23 billion.
In Thursday’s release, the government said it expected to collect lower tax revenue from the city’s gaming industry. Such taxes usually account for more than 80 percent of the government’s revenue each year. As a result, the government said it now expected a MOP38.95-billion deficit for full-year 2020, and that it would have to tap its “extraordinary” financial reserves to cover the shortfall.
The Macau Monetary Authority said in February that the government’s financial reserves stood at MOP579.4 billion at the end of 2019, comprising “basic” reserves of MOP148.9 billion and “extraordinary” reserves of MOP430.5 billion.
In Thursday’s statement, the government said also that it had revised its 2020 budget plan. It now forecasts aggregate revenue of nearly MOP111.83 billion for 2020, down from an original estimate of just below MOP117.07 billion. Total expenditure is now expected to reach approximately MOP111.0 billion, up from an initial prediction of MOP96.28 billion. The increase, said the government, takes into consideration several financial measures announced in recent weeks to help boost the city’s economy.
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"The Macau recovery continues to be disrupted by false starts, while the lack of [Chinese] public holidays for rest of the year should cap the pace of the rebound”
Andrew Lee and David Katz
Analysts at brokerage Jefferies LLC