{ "title": "People’s Republic of China—Macao Special Administrative Region: Staff Concluding Statement of the 2022 Article IV Mission", "publication": "IMF News, January 24, 2022", "sourceUrl": "https://www.imf.org/en/news/articles/2022/01/21/peoples-republic-of-china-macao-sar-concluding-statement", "canonical": "https://www.imf.org/en/news/articles/2022/01/21/peoples-republic-of-china-macao-sar-concluding-statement", "overlayPath": "/en/news/articles/2022/01/21/peoples-republic-of-china-macao-sar-concluding-statement/index.md", "summary": "Pandemic impact and recovery", "publishDate": "2022-01-24", "sections": [ { "heading": "I. Macroeconomic situation: elevated uncertainty ahead", "content": "- Pandemic impact and recovery\n - Aggregate GDP shrank by 54 percent in 2020, mostly on the collapse of services exports.\n - The economy is estimated to have expanded by 17 percent in 2021 helped by the partial recovery of the gaming sector.\n - GDP is projected to grow by 15 percent in 2022 driven by the gradual return of foreign tourists and the recovery of domestic demand.\n - Growth is expected to accelerate to 23 percent in 2023 before gradually converging to its long‑term potential of around 3.5 percent over the medium term.\n - Given the depth of the economic losses during the pandemic, the level of GDP is expected to surpass its pre‑crisis level only in 2025.\n- External and financial position\n - Staff’s preliminary assessment: Macao SAR’s overall external position remains substantially stronger than warranted by medium‑term fundamentals and desirable policies.\n - The current account surplus in 2021 is estimated at less than half of the level observed in 2019.\n - The banking system remains well capitalized with solid levels of liquidity and profitability; capital adequacy is in double digits; the nonperforming loan ratio remains low.\n - Household debt to banks, half of which are mortgages, accounts for more than half of banks’ domestic credit.\n - Banks’ external exposures: large exposure to Mainland China; a significant share of foreign liabilities has less than one year maturity, creating funding vulnerabilities.\n- Balance of risks (tilted to the downside in the short term)\n - Resurgent pandemic: renewed COVID‑19 outbreaks and mobility restrictions could stall recovery and prompt persistent behavioral changes (e.g., a permanent shift toward online gaming).\n - Tighter regulation of the gaming industry: uncertainty from gaming law reforms and the recent ban on gaming services’ marketing in the Mainland could affect the VIP segment.\n - Spillovers from Mainland China: large‑scale defaults in Mainland China’s real estate sector or a sudden Mainland slowdown could prompt negative spillovers.\n - Financial risks: reduced household income lowers debt‑servicing capacity; tighter global financial conditions could pressure non‑financial firms and the banking system.\n - Climate change: intensification of climate‑related risks could adversely affect financial institutions and corporates." }, { "heading": "II. Fiscal policy: near‑term support and medium‑term strategy", "content": "- Near-term guidance\n - Premature withdrawal of policy support should be avoided.\n - Fiscal support remains essential; the fiscal tightening envisaged in the 2022 budget is premature given the still‑large output gap and significant downside risks.\n - Given fiscal space remains ample, a neutral fiscal stance in 2022 is recommended to support non‑gaming activity and mitigate long‑term potential losses.\n- Recalibration and priorities\n - Target cash transfers to the most vulnerable households (high propensity to consume).\n - Incentivize job creation and continue job placement and matching efforts, particularly for youth.\n - Additional spending on healthcare, education, and scaling up macro‑critical public investments in climate resiliency to boost demand and assist diversification.\n - Maintain strict fiscal transparency and accountability for COVID‑19‑related spending consistent with other government spending.\n- Medium/long‑term fiscal framework\n - A well‑articulated medium‑term fiscal strategy would support diversification and climate resiliency efforts, preserve fiscal space, and ensure fiscal sustainability and intergenerational equity.\n - A medium/long‑term fiscal framework (MLTFF) should integrate fiscal decisions, specify short- and medium‑term priorities, ensure spending and tax efficiency, and provide clear guidelines for fiscal sustainability." }, { "heading": "III. Financial sector policies and stability measures", "content": "- Monitoring and resolution\n - Strengthen monitoring of enterprises and households to anticipate potential increases in insolvencies.\n - Encourage banks to conservatively provision to withstand potential asset quality deterioration.\n - Enhance insolvency and debt resolution and restructuring frameworks, including special out‑of‑court solutions, to avoid overloading courts.\n- Managing spillovers and liquidity risks\n - Enhance regulatory and supervisory frameworks to manage risks from significant exposure to Mainland China.\n - Monitor credit risk of borrowers from Mainland China and conduct forward‑looking risk assessments.\n - Maintain close supervisory cooperation with the Mainland to minimize regulatory arbitrage.\n - Carefully monitor liquidity positions of banks with large short‑term foreign liabilities.\n- Macroprudential policy\n - To curb risks from residential property price growth, link differentiation in LTV limits to banks’ risk assessment of loans and borrowers rather than current residency‑based differentiation.\n- Exchange rate regime\n - The peg to the Hong Kong dollar continues to serve Macao SAR well as a credible nominal anchor.\n - Its success is underpinned by countercyclical fiscal policy, flexible labor markets, a healthy banking sector, and adequate reserve coverage; maintaining these policies will ensure continued success." }, { "heading": "IV. Structural reforms and economic diversification", "content": "- Diversification strategy and opportunities\n - The government’s Master Plan of the Development of the Guangdong‑Macao Intensive Cooperation Zone aims to develop four nascent industries and facilitate integration into the Guangdong‑Hong Kong‑Macao Greater Bay Area (GBA).\n - Progress in promoting modern financial services is welcome; diversification will require addressing structural bottlenecks.\n- Key reforms to support diversification\n - Skill building: invest in outcome‑orientated occupational and on‑the‑job training; strengthen science‑business linkages.\n - Talent attraction: streamline administrative requirements for hiring non‑resident skilled workers.\n - Regional integration: leverage GBA integration to access a larger pool of skilled labor and offshore activities.\n - Physical and ICT infrastructure: close infrastructure gaps vis‑a‑vis OECD countries, including digital infrastructure; AMCM steps to deploy new financial infrastructure are welcome.\n - Housing and regulatory reforms: boost public housing supply; reform regulatory frameworks to increase private sector housing supply.\n - Public institutions and business environment: increase regulatory predictability, raise judicial independence, strengthen protection of property rights, and streamline labor and business regulations.\n- Financial sector development balance\n - Balance financial sector development with the need to preserve financial stability and integrity.\n - Identify and mitigate ML/TF risks as the financial sector expands." }, { "heading": "V. AML/CFT and governance actions", "content": "- Actions and remaining gaps\n - The government has made good progress in addressing technical compliance deficiencies in AML/CFT.\n - Further strengthening needed for the offshore sector and for investigation and prosecution of laundering of foreign proceeds of crime, particularly through the gaming sector.\n- Enhanced cooperation\n - Government diversification initiatives are spread across different agencies; enhanced interagency cooperation would improve policy effectiveness." }, { "heading": "VI. Climate change: exposure and adaptation priorities", "content": "- Climate exposure and risks\n - Macao SAR faces high risks of cyclones and medium risk of coastal floods and water scarcity.\n - Some critical infrastructures are at risk of being below the annual flood level within ten years.\n- Adaptation and financial resilience measures\n - Align public policies with climate objectives and build early warning systems to monitor climate change exposure.\n - Update land‑use planning strategy to address sea‑level rise and storm surges; strengthen coastal protection and mitigate coastal erosion.\n - Scale up public investments in critical infrastructure, water security, and coastal management.\n - Improve understanding and management of financial risks due to climate change; the authorities’ intention to improve insurance coverage for climate‑related disasters is positive." }, { "heading": "VII. Key policy recommendations summary", "content": "- Fiscal\n - Avoid premature withdrawal of policy support; adopt a neutral fiscal stance in 2022.\n - Target cash transfers to vulnerable households; incentivize job creation; increase spending on healthcare, education, and climate‑resilient infrastructure.\n - Develop a medium/long‑term fiscal framework to support diversification, climate resiliency, fiscal sustainability, and intergenerational equity.\n- Financial sector\n - Strengthen monitoring of household and enterprise debt; encourage conservative provisioning.\n - Enhance insolvency and debt resolution frameworks; monitor banks’ liquidity and exposure to Mainland China; deepen supervisory cooperation with the Mainland.\n - Adjust macroprudential measures (LTV differentiation linked to risk assessments).\n- Structural reforms\n - Invest in skills and training; streamline hiring of non‑resident skilled workers; close physical and digital infrastructure gaps; improve regulatory predictability and judicial independence.\n - Coordinate interagency efforts to implement diversification strategies effectively.\n- Climate\n - Scale up public investments in climate adaptation, coastal management, and water security; enhance insurance coverage and financial-sector climate‑risk management.\n\nPeople’s Republic of China—Macao Special Administrative Region: Staff Concluding Statement of the 2022 Article IV Mission, January 23, 2022\n\n---\n\n\n References\n\n- People's Republic of China - Macao Special Administrative Region and the IMF\n- IMF Policy Advice -- A Factsheet\n- Mission Concluding Statements\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2022/01/21/peoples-republic-of-china-macao-sar-concluding-statement" } ], "bullets": [ "[Markdown version](/en/news/articles/2022/01/21/peoples-republic-of-china-macao-sar-concluding-statement/index.md)", "[Structured JSON version](/en/news/articles/2022/01/21/peoples-republic-of-china-macao-sar-concluding-statement/index.json)", "[Bundle manifest](/en/news/articles/2022/01/21/peoples-republic-of-china-macao-sar-concluding-statement/bundle-manifest.json)", "Published: January 24, 2022", "Pandemic impact and recovery", "External and financial position", "Balance of risks (tilted to the downside in the short term)", "Near-term guidance", "Recalibration and priorities", "Medium/long‑term fiscal framework", "Monitoring and resolution", "Managing spillovers and liquidity risks", "Macroprudential policy", "Exchange rate regime", "Diversification strategy and opportunities", "Key reforms to support diversification", "Financial sector development balance", "Actions and remaining gaps", "Enhanced cooperation", "Climate exposure and risks", "Adaptation and financial resilience measures", "Fiscal", "Financial sector", "Structural reforms", "Climate", "[People's Republic of China - Macao Special Administrative Region and the IMF](http://www.imf.org/external/country/MAC/index.htm)", "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)", "[Mission Concluding Statements](https://www.imf.org/en/news/searchnews)", "[PRESS CENTER](http://presscenter.imf.org/)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2022/01/21/peoples-republic-of-china-macao-sar-concluding-statement/index.md", "json": "/en/news/articles/2022/01/21/peoples-republic-of-china-macao-sar-concluding-statement/index.json", "bundleManifest": "/en/news/articles/2022/01/21/peoples-republic-of-china-macao-sar-concluding-statement/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T00:54:39.288Z" }