The local government said in a statement yesterday that it disagreed with Moody’s Investor Service’s decision to change Macau’s credit outlook to “negative” from “stable”.

The government expressed its disagreement through a statement issued by the Monetary Authority of Macau (AMCM) and released through the Macau Government Information Bureau (GCS) late last night. 

New York-based Moody’s Investors Service, generally referred to as Moody’s, is the credit rating business of Moody’s Corporation founded by US financial analyst John Moody in 1909. Moody’s is one of the world’s “Big Three” credit rating agencies, along with Standard & Poor’s and Fitch Group.

Moody’s said in a statement earlier yesterday that it had downgraded its outlook on the credit rating of the Chinese mainland, Hong Kong and Macau to “negative” from “stable”. 

The AMCM statement underlined that Moody’s maintained the long-term issuer credit rating of “Aa3” for the Macau Special Administrative Region (MSAR). The AMCM statement pointed out that according to Moody’s rating definition, an “Aa3” rating is the fourth highest level, indicating a very low credit risk of default. 

However, the AMCM statement said, the local “government disagrees with Moody’s adjustment of the MSAR’s rating outlook from ‘stable’ to ‘negative’.”

The AMCM statement emphasised that the Ministry of Finance in Beijing “has pointed out that China’s macro-economy continues to recover and high-quality development is steadily advancing. 

“China’s economy will maintain its upward momentum, and China will remain an important engine for stable growth of the world economy. 

“The International Monetary Fund estimates that China will contribute more than 30 percent to global economic growth this year. 

“Looking to the future, China’s economy has great resilience and potential for development, and its long-term positive fundamentals have not changed.” 

The statement by Macau’s monetary regulator also said that the local government “continues to adhere to prudent fiscal management during the period of economic adjustment. 

“Its abundant fiscal and foreign exchange reserves have given the MSAR a strong ability to respond to and withstand external risks. 

“The MSAR government does not have any debt burden, its public finances, external revenue and expenditures and financial conditions are very stable, and the asset quality and capital levels of banks remain good.”

The AMCM statement also pointed out that “with the full resumption of personnel exchanges between Macau and neighboring regions and around the world, and the tourism carrying capacity gradually returning to normal, the rebound in external demand has driven the steady recovery of Macau’s economy. 

“In the first three quarters of 2023, Macau’s GDP grew by 77.7 percent in real terms year on year. 

“At the same time, the MSAR government will continue a series of tourism promotion and publicity activities, coupled with the orderly advancement of investment plans for non-gaming projects by [Macau’s six] gaming concessionaires, to effectively improve Macau’s international competitiveness and enrich Macau’s connotation as a world centre of tourism and leisure.” 

Early last month, the AMCM statement pointed out, the local government released the MSAR Economic Appropriate Diversification Development Plan (2024-2028), which finetuned its “1+4” appropriate diversified development strategy combining Macau’s tourism and leisure industry with big health, modern finance, high-tech, as well as conventions, exhibitions, commerce, culture and sport, with the aim of optimising Macau’s industrial structure to inject new momentum into Macau’s economy and, thereby, achieving sustainable growth.

The AMCM statement underlined that “Macau’s close economic ties with mainland China provide strong support for Macau’s long-term development,” adding that “the global economy is currently facing complex challenges with multiple uncertainties. 

“The real growth of the mainland economy in the first three quarters of 2023 will still reach 5.2 percent, which will have a positive impact on Macau’s external demand,” the AMCM statement concluded. 

Moody’s also downgraded its outlook for the credit ratings of the Central People’s Government and the HK SAR to “negative” from “stable”. 

Both the HK SAR government and Central People’s Government said they disagreed with the downgrade.  

The Finance Ministry said it was disappointed by Moody’s downgrade, adding that the mainland economy will maintain its rebound and positive trend.

This November 2008 file photo shows the headquarters of Moody’s at the 7 World Trade Center in New York.
– Photo courtesy of Sweeneyr/Wikimedia Commons