By Poyi (Natalie) Leung
The Macau Government may hold the Secretary for Economy and Finance accountable for the fiscal reserve system and set up an advisory committee to provide investment strategies, the Third Standing Committee of the Legislative Assembly proposed yesterday.
The draft bill states that the Monetary Authority (AMCM) will be the entity to run and manage the fiscal reserve system, but president of the committee Cheang Chi Keong pointed out that it did not specify who will be accountable for the system.
Macau has already registered some MOP 110 billion accumulated surplus as of the end of 2009.
“It is a huge amount and will continue to increase in the future. The standing committee believes that [the fiscal reserve system] shouldn’t be operated in the same way as the other Government funds,” Cheang told reporters after the closed-door meeting at the legislature.
“The highest-level official from the economy and finance area – meaning the Secretary for Economy and Finance Francis Tam Pak Yuen – should be held accountable for this matter. He can then authorise the AMCM to invest and run the system, it may be more advantageous,” he said.
The AMCM has been operating the foreign exchange fund. Cheang said the standing committee is going to ask the authority for its past investment records in a bid to find out its performance in managing funds.
Meanwhile, Cheang disclosed that the standing committee has suggested setting up an advisory commission made up of financial professionals, to propose investment strategies or even investment portfolio to the secretary for approval.
The commission should also be required to supervise the fiscal reserve to make sure that it is sound and stable, he added. Yet, he stressed that the commission will only make suggestions under a “general framework”, denying that a conflict of interest will occur.
Since the Government has proposed to divide the fiscal reserve system into a basic reserve and an “excess” reserve, Cheang said the standing committee is concerned about the justifications behind this decision.
The basic reserve will equal 1.5 times the total expenditure incurred by the Government indicated in the most recent Budget Plan, while the remaining fund will go to the “excess” reserve. The draft law also states that only when the “excess” reserve is used up can the basic reserve be touched.
Nevertheless, Cheang reiterated that the Government will be required to hand in a proposal to the legislature for approval before it can use either the “excess” or the basic reserve.
After listening to the legal advisors’ report in the meeting, Cheang assured that the fiscal reserve system is “completely feasible technically”, adding that the lawmakers agreed that “it’s the right time to create the system”.
Cheang said the standing committee will present its suggestions and express the concerns to the Government representatives in the next meeting, which will only be held after the five secretaries have announced their 2011 policy initiatives in early December.