Hong Kong, China, 25 April – Macau’s financial health is solid although there are some risks that make the territory vulnerable to external shocks, according to US ratings agency Moody’s Investors Service.
“Macau’s solid fiscal position has produced considerable public sector surpluses over the past five years and because it does not have any public debt that needs to be repaid, its budget surpluses are all saved,” said Steven Hess, senior credit analysts of Moody’s sovereign risk unit.
Saying that the Aa3 issuer rating on Macau continued to be supported by string fiscal and financial indicators, Hess added that on virtually all external liquidity and vulnerability indicators Macau was stronger than similarly-rated jurisdictions.
The statement issued by Moody’s added that the recent government decision to freeze the grant on new casino licenses would not have any influence on the territory’s rating.
But Hess noted that economic growth in Macau – 27.3 percent in real terms in 2007 after a record 28.4 percent in 2004 – would slow when construction activity slowed down.
“Another potential vulnerability is the linked exchange rate between the pataca and Hong Kong dollar and the concern that developments in Hong Kong can directly affect Macau,” Hess said, adding that dependence on gaming and tourism made Macau vulnerable to external shocks. (macauhub)