On 25 May 2016, Moody’s Investors Service published a press release that announced to downgrade Macao SAR’s government issuer rating to “Aa3” from “Aa2”. Macao has remained in the “double-A” rating category, reflecting that the international rating agency recognises Macao’s sound economic fundamentals. “Aa3” is three notches lower than the highest rating. Moody’s also assigns “Aa3” rating to Mainland China and Belgium. The Monetary Authority of Macao reiterates that Macao’s economic and financial conditions are fundamentally sound and the SAR is able to deal with fluctuations. On public finance, the fiscal balance for the first four months of 2016 stayed in surplus, valued at MOP15.5 billion, after registering a surplus of MOP29.3 billion in 2015. At the end of the first quarter of 2016, Fiscal Reserve assets were preliminarily estimated at MOP436.0 billion, which was equivalent to 59 months of 2016 budgeted government expenditure. In addition, the SAR Government has no debt. A credible linked exchange rate system and sufficient foreign exchange reserves have lent crucial support to the SAR’s external financial position. As at the end of April 2016, Macao’s foreign exchange reserves were preliminarily estimated at MOP151.8 billion, representing 12 times the currency in circulation or 106.9% of Pataca M2 at end-March 2016. The SAR’s financial system has remained stable. In the first quarter of 2016, banks’ profits reached new high and continued to maintain good asset quality and adequate capital level. Banks’ operating profits before tax increased 16.1% year-on-year to MOP3.5 billion in the first quarter of 2016. At the end of the first quarter of 2016, the non-performing loan ratio remained at an ultra-low level of 0.12% and the capital adequacy ratio, mainly composed of tier-one capital, marked at 15.5%. Meanwhile, the SAR’s economic fundamentals have remained positive. In a period of deepened economic adjustment, especially when Macao’s gross domestic product recorded a negative growth of 20.3% in 2015, its employment situation remained stable as the unemployment rate stayed below 2.0%. Its GDP per capita reached USD71,984, which was one of the highest in the world. Over the long term, Macao’s economic resilience and creditworthiness will continue to be effectively supported by its fiscal strength, solid external financial position, credible policy framework, reliable linked exchange rate system, sound financial system and strong economic fundamentals. The SAR Government will continue to monitor the overall economic development, and will orderly drive Macao forward with proper economic diversification and sustainable development by capitalising on opportunities arisen in a period of economic adjustment.
