Macau’s Secretary for Economy and Finance Lionel Leong Vai Tac (pictured) said the government has to be prepared to cut spending if monthly casino gross gaming revenue (GGR) falls below MOP18 billion (US$2.25 billion). Much of the city’s public revenue comes from taxes on gambling, levied at an effective rate of 39 percent of the gross.
The Macau government had already submitted to the Legislative Assembly a revised budget for 2015. The amended budget proposal for this year cuts the forecast tally for public revenue to MOP119.97 billion, from the original estimate in November of MOP154.66 billion.
The administration now expects average gross monthly gaming revenue of MOP20 billion this year, down from an earlier estimate of MOP27.5 billion.
Speaking to reporters on Tuesday after a closed-door meeting with legislators, Mr Leong said the government expects to have a surplus of MOP10 billion in 2015, based on the amended budget proposal.
The official however said that if monthly GGR falls to bellow MOP18 billion, the government budget would be very close to a deficit.
The Macau government surplus is down by 52.9 percent year-on-year in the first three months of 2015 to MOP16.5 billion, according to official data. The government collected a total of MOP23.9 billion in direct taxes from gaming in the first quarter of the year, down by 33.1 percent from a year earlier.
Overall, the figures show a 32.9 percent year-on-year decrease in government revenue for the first three months of 2015, at MOP28.3 billion.
Accumulated GGR for the first three months of 2015 stood 36.6 percent lower than in the same period in 2014, at approximately MOP64.8 billion. The city recorded GGR of MOP19.5 billion in February, the first time in four years Macau’s monthly gaming revenue tally stood below MOP20 billion.
On Tuesday, Mr Leong said that if GGR falls to MOP18.5 billion in April – which would mean a 40-percent decline year-on-year – the average for the first four months of 2015 would still be above MOP20 billion. As such, he added, there would be no immediate need for any austerity.
Mr Leong however said the government must prepare plans on how to cut back on spending, pledging that spending on social welfare and public servants’ salaries would be ring-fenced. The policy secretary added that he hopes the government can increase the execution rate of the public investment plan, which includes capital spending on major infrastructure projects such as the light rail transit system.
The budget cutback could have an impact on the budgets of autonomous public entities, such as the Macao Foundation and the University of Macau, said Mr Leong, adding that it is too early to talk about percentages.
