Government announces spending cuts amid continuing gaming slump

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The Macau Government announced yesterday the immediate implementation of austerity measures calculated to save some MOP1.4 billion (about US$175 million) for the current fiscal year, as the gross gaming revenue of the city has already fallen below the set monthly target of MOP20 billion for the full year. For the first eight months of this year, cumulative gross gaming revenue has amounted to MOP158.88 billion, which translates into a monthly average of about MOP19.86 billion, according to the latest data released by the Gaming Inspection and Co-ordination Bureau (DICJ) yesterday. With the aim of saving about MOP1.4 billion for the full fiscal year, the government announced yesterday a series of cost-cutting measures including that government departments and autonomous organs freeze 5 per cent of the budgeted consumption spending as well as 10 per cent of budgeted ‘investment spending’ – a term referring to items such as furniture purchase or minor construction. Autonomous organs here, such as the Monetary Authority of Macau and Social Security Fund, are also required to cut their supplementary expenditure according to yesterday’s government announcement. ‘The MSAR Government has to stress again that the territory’s finances are sound and that its comprehensive fiscal reserve system should suffice to cope with any ad-hoc incidents or economic fluctuations,’ the announcement read. ‘The austerity measures will not affect spending related to social welfare, including the cash-sharing plan for this year,’ the government said. ‘The measures will also not affect the public investment plan (PIDDA).’ The public investment plan refers to the major infrastructure projects here that usually absorb multiple years of government investment. In March, the government amended the budget for fiscal 2015, downsizing its estimate for average monthly gross gaming revenue from the original MOP27.5 billion to MOP20 billion. Speaking to reporters on the sidelines of an event yesterday, the Secretary for Social Affairs and Culture, Alexis Tam Chon Weng, said that with the latest implantation of the cost-cutting measures his departments are cutting non-essential items such as celebratory events, the reception of guests and overseas visits. However, the government is yet to spend more on education and medical services, the Secretary stressed. “The scale of the cost-cutting measures is still small, and what the government did is a necessary move, especially as the civil service units and their staff have expanded quite rapidly these years,” remarked Jenny Huang Bi Hong, assistant professor in public finance and taxation at the University of Macau. “But what the government needs to pay more attention to now – apart from a continuous monitoring of gaming revenue decline – is the visitor arrivals here as their spending has also shown a drop recently,” Ms. Huang said. “That rings alarm bells that the government needs to hurry in searching for new economy growth points, and to better manage its financial resources to establish a sovereign fund.” The government’s fiscal surplus was MOP27.2 billion (about US$3.4 billion) in the first seven months of this year, 59.1 per cent less than in the corresponding period a year earlier, the Financial Services Bureau says. The contraction was mainly due to the decline in revenue from direct taxes on gaming, which have plunged 35.7 per cent year-on-year to MOP51.9 billion.