E-vouchers to give economy bigger boost than salary subsidy: economist

The government-issued e-vouchers, formally known as the Consumption Subsidy Smartcard, which are being handed out to all local residents, are expected to be more beneficial for small and medium sized enterprises (SMEs) in alleviating the financial burden of Covid-19 than the 15,000 pataca salary subsidy that was recently distributed, according to an economist.
The second round of e-vouchers will be issued this month and will be made available for use starting in August and lasting until the end of the year. Eligible Macau residents, permanent and non-permanent, will receive 5,000 patacas worth in credit to be spent in Macau.
This adds to a previous round worth 3,000 patacas which was to be spent between May 1 and July 31.
So far, official data shows that spending by local residents using consumption vouchers reached a total of 1.46 billion patacas in the past two months. Of this, 70% of total spending went to the retail and supermarket sector.
Speaking to the Times, economist Albano Martins suggested the e-vouchers have largely supported local SMEs but have not directly contributed to the city’s economy.
“I believe it will help pay expenses in situations like this but the normal consumption in 2019 was around 110 billion patacas. [In this scheme], we are talking about 1.5 billion to 3 billion patacas during the three months. It’s a small amount of support,” Martins said.
Based on the figure of 110 billion patacas, the city’s consumption previously stood at some 9.2 billion per month.
These consumption vouchers were benefitting SMEs, as the money went directly to them, unlike the 15,000 patacas salary subsidy, which will not circulate if residents choose to keep the money in banks.

“The [salary subsidy] can help some people, but this is a time where it is important to keep the economy boosted. It’s so much cleverer to use the subsidy for private consumption because it will generate jobs and employment, and alleviate communities that are not so rich,” the economist said.
With the next round of vouchers rolling out this July and available for use by August, Martins predicts that the second phase vouchers will help support the economy through December, the end of the 2020 budget period.
Details about the upcoming round will be announced at a later date. It is thought that the criteria and requirements will remain unchanged from the first round of the e-voucher scheme. The extra e-vouchers will cost the government MOP3.6 billion. The first phase cost the government some MOP2.2 billion.
Asked about other government measures recently announced, Martins argued that it was not wise for the government to reduce its 2021 public expenditure by 10%.
Last week, Chief Executive Ho Iat Seng ordered the local government to cut expenditure next year as a consequence of Covid-19.
The total expenditure of the MSAR integrated budget for the 2020 financial year is 114.64 billion patacas, and the balance is currently 828.88 million patacas.
The decree says that amid the changes to the economic environment, all public government departments and organizations must make prudent evaluations of all types of budget expenditure for next year.
“Next year, for sure we will not reach the 2019 level [of economic activity] and that’s expected. So to cut the expenses by 10% as the government had announced is not clever and it’s against the basic concepts of macroeconomics,” Martins explained.
“These expenses are good for [the] economy because it’s a direct incentive for private consumption, which is one of the variables of gross domestic product.”