IMF Concludes 2019 Article IV Consultation with Macao SAR

The International Monetary Fund (IMF) concluded the 2019 Article IV Consultation with Macao Special Administrative Region (Macao SAR) and published its Staff Report today (9 May, 2019, US time; 10 May, 2019, Macao time). This report reinforces the IMF Staff Mission’s assessment of Macao SAR’s macroeconomic and financial positions in the Staff Concluding Statement released by the IMF on 25 February, 2019.

The Mission affirms Macao SAR’s strong fiscal and external financial positions, credible linked exchange rate system, sound financial system, wide-ranging plans of economic diversification and prudent macroeconomic policies. On economic outlook, the Mission expects the SAR economy to achieve relatively stable and solid growth over the medium term, driven by tourism and continued diversification efforts. Economic growth is projected at 4.3% in 2019 and about 4.0% over the medium term.

The IMF recognises the prudent macroeconomic policies of the SAR Government with zero gross debt, which has endowed the SAR with large fiscal and external financial buffers. These buffers will continuously anchor the stability of Macao SAR economy and reduce external vulnerabilities emanating from global economic uncertainties. On the external financial front, the SAR remains a net foreign creditor, driven by its sizable current account surplus and reserves as well as the external position of its banking sector. Macao SAR’s ample net foreign assets will underpin its medium-term external solvency.

The IMF Mission concurs the SAR Government’s plans to enhance medium-term growth resilience via three diversification objectives: 1) from high-end VIP gaming business to mass-market gaming business, 2) from gaming tourism to non-gaming tourism and 3) bolstering the growth of the financial sector. The Mission emphasises that diversification policies should be guided by careful study of the SAR’s comparative advantage. Regarding policy formulation for developing the financial sector, the Mission assents that Macao SAR’s position as a Commercial and Trade Cooperation Service Platform between China and Portuguese-speaking countries is a natural area for financial sector growth while fostering a highly educated workforce would be important to achieve this goal.

The IMF reaffirms its support for the linked exchange rate between the MOP and the HKD under a credible currency board regime, which continues to serve Macao SAR well. The success of the currency board is in large part due to steady application of the necessary supportive policies, including adequate foreign exchange coverage, a liquid and well-capitalised banking sector, prudent fiscal policy and flexible labour market.

The Mission compliments Macao SAR’s sound financial sector and welcomes the progress in strengthening the SAR’s anti-money laundering and combating financing of terrorism framework. The financial soundness indicators regarding asset quality, earnings, and liquidity remain robust. The current macroprudential regulations with respect to the real estate market appear broadly appropriate while systemic risks are largely contained. In addition, the IMF welcomes the incentives of the Monetary Authority of Macao in strengthening cross-border supervisory cooperation, which are deemed to facilitate the prevention of regulatory arbitrage and avoidance.

The IMF Mission visited Macao SAR during 14-25 February, 2019 to conduct the 2019 IMF Article IV Consultation and the Staff Concluding Statement was published on 25 February 2019. The Staff Report was considered and endorsed by the IMF Executive Board on 24 April, 2019. The next IMF Article IV Consultation with Macao SAR will take place on the standard 24-month cycle.

Links to the relevant press release and Staff Report of the 2019 Article IV Consultation with Macao SAR, as endorsed by the IMF Executive Board, are listed below:

  1. Staff Report of the 2019 Article IV Consultation with Macao SAR:

  2. Press release of the IMF Executive Board conclusion:

Under Article IV of the IMF’s Articles of Agreement, bilateral macroeconomic consultations with individual members are held on a regular basis. A staff team visits the member country, collects economic and financial information, and discusses the country’s economic developments and policies with officials. On return to the headquarters, the staff prepares a report, which forms the basis for discussion and conclusion by the IMF Executive Board. The IMF conducts separate Article IV Consultation with the Mainland, Hong Kong SAR and Macao SAR under the membership of China.

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