Albano Martins
Made at the beginning of the year, my gaming income forecasts for 2021 pointed to 93.8 billion patacas, a figure more accurate than those presented either by the Government or by the main gaming analysts.
The latter continue to be maintained to date, but I don’t think it’s possible, given the surrounding circumstances, that gaming income could exceed 83 billion patacas in 2021. These values should be very close to the 2022 values that I predict to be 80 billion.
The Government, again showing lack of common sense and little experience in budgetary matters, is once more forecasting 130 billion in gaming income for 2022, which taking into consideration the taxation of 39 percent, means that they expect to collect 50.7 billion patacas.
As the 2022 budget is 100.1 billion patacas and as the Government expects to use the financial reserve of around 33.3 billion, it is easy to conclude that they will have to generate the remaining 66.8 billion. It this possible?
No, it will not be possible in a closed economy, which is more hostile to the only de facto local industry, and with no light at the end of the tunnel of zero Covid-cases policy.
If gaming income is what I foresee for 2022, the Government will generate for the public coffers only 31.2 billion in gaming taxes, which means that it will have to find 68.9 billion to balance the accounts. Now, as the normal income from other taxes and fees should not be far from 14 billion, this means that the Government, instead of having to dig into the financial reserves for just 33.3 billion, it will have to fetch 54.9 billion to balance the books.
The fiscal year is an exercise in prudence. Prudence is not just about the avoidance of wasting public resources, but also about making economic policy based on credible forecasts. By not doing so, there is an increased reliance upon using public reserves as the only solution.
But has the Government considered that it may resort to the financial system instead of necessarily having to use the public coffers?
This would be an incentive to financial activity, eventually creating new jobs, at a time when there is so much talk about diversification through the financial system.
But the government may have to find even more funding if the economy sinks further. And this brings with it the need for even more policies to support consumption and SMEs, in turn necessitating increased deficit financing.
When there is a dangerous cycle of economic contraction, and deflation or very close to it, the government must give a positive signal to the business community, by investing in or launching policies to support operators and the community.
Contracting the public budget is sending the message that the future will be worse. The news that the levels of professional tax refunds will drop to MOP 14,000 and companies will no longer have a tax deduction (tax forgiveness) of MOP300,000 is not very positive.
For 2021, my forecasts point to deflation up to November, with a slight inflation of almost 0.1 percent to perhaps end the year.
But if everything continues like this, we could be somewhere in 2022 in a situation of stagflation (inflation with economic stagnation), which is more complicated to manage because the incentives for economic activity may accelerate inflation.
There is still time for a more positive economic policy. Has the Government considered presenting a forecast of GDP growth and inflation for 2022, to show the community that it is not walking in the dark?
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