HONG KONG, April 16 (Reuters) - The leader of Macau stated the enclave dangers slipping into a deficit spending if gambling profits on the planet's greatest gambling hub drop below 15 billion patacas ($1.88 billion) a month after they fell short of government projections in the first quarter.
President Sam Hou Fai made the remarks on Tuesday to local legislators, according to a government declaration.
"If subsequent video gaming revenues still do not meet the target, the Government will face a deficit spending," he said, according to the declaration.
Macau is a special administrative area of China and is the only location where Chinese people are lawfully allowed to gamble in gambling establishments.
A Portuguese nest until 1999, its economy is greatly dependent on its gambling establishment industry which contributes about 80% of the federal government's tax earnings.
"The imbalance in our financial structure is major and we should maintain a strong sense of crisis awareness. Macau is a small city, yet our regular expense is significant and it will continue to grow unless we deal with up to severe scenarios," he said, according to public broadcaster TDM.
A slow down in financial development both in China and worldwide are essential issues for Macau's gambling establishments, especially offered a flurry of U.S. announcements to enforce import tariffs worldwide, including on China, analysts stated.
DS Kim, an expert at JP Morgan in Hong Kong, stated Macau deals with "second-order effects" from the expected downturn in orders for neighboring Guangdong, China's biggest export center, and a weaker yuan.
He now expects a potential worst case 10% decrease in gaming incomes for Macau versus a low single-digit development forecast.
Macau's first-quarter gaming revenue rose 0.6% year-on-year to 57.7 billion patacas, or 19.2 billion patacas monthly, versus the federal government's full-year projection of 240 billion patacas, or 20 billion patacas each month.
Authorities in Beijing and Macau have mandated that the six licensed gambling establishment operators Sands China, Wynn Macau, SJM Holdings, MGM China, Galaxy Entertainment and Melco Resorts diversify their earnings base far from the gambling establishment industry. ($1 = 7.99 patacas) (Reporting by Farah Master: Editing by Neil Fullick)