Gov’t expects limited ‘Brexit’ impact

The government says it is paying close attention to developments unfolding since the United Kingdom opted for a “Brexit” in its referendum last week, though it believes the decision will have a limited impact on Macau. According to the Government Information Bureau (GCS), a “response mechanism” has been established to address any potential economic impact of Britain’s exit from the European Union on the MSAR.
Despite the response, GCS says that the government is expecting “only a limited impact” on Macau to follow, since the MSAR has “little direct trade with the UK.” Furthermore, Macau’s economy is unlikely to be significantly affected by changes in stock markets that are responsive to conditions in the UK.
The Secretary for Economy and Finance, Lional Leong, visited the headquarters of the Macau Monetary Authority on Friday to gain a better understanding of Macau’s strategy to minimize economic risk to the city due to external events. According to GCS, Leong has already briefed the Chief Executive on the MSAR’s arrangements regarding these risks.
The government would take all necessary measures in order to ensure the stability of Macau’s economy and finances, Secretary Leong said on Friday, as cited by GCS.
Around 0.35 percent of Macau’s MOP150.5 billion foreign currency reserves is denominated in GBP, minimizing the impact on the city of the 11 percent drop in the price of the pound that occurred on Friday. Macau’s fiscal reserve is larger, estimated to be in excess of MOP430 billion, not including the government surplus from 2015.
The government is closely monitoring occurrences in the international economy in order to update its investment portfolio. Likewise, members of the public are urged to pay extra attention in the near future regarding risk management, in particular when investing in stock markets.
The region’s sound public finances, well-­established fiscal reserve system, stable linked exchange rate system and healthy financial system would shelter the city from such volatility in international markets, according to an analysis published by GCS. DB