The COVID-19 pandemic and the multiple threats it poses to our nation is the sort of event that Singapore has accumulated reserves for, said Minister Heng Swee Keat in his Resilience Budget speech today.
Mr Heng said that Singapore is experiencing a confluence of multiple external shocks, with the pandemic triggering many nations to shut their borders, limit exports, and halt economic activities.
This economic impact is magnified, as the global economy is already fragile and further weakened by a protracted US-China trade conflict and an oil price war.
He notes that this is a “black swan” event that comes only once every few decades.
In view of the exceptional circumstances, the Government has sought President Halimah Yacob’s in-principle support to use past reserves to fund part of the package to save jobs and the economy.
These include the Jobs Support Scheme enhancements, the Self-Employed Person Income Relief Scheme, the Temporary Bridging Loan Programme, the enhanced Enterprise Financing Scheme, and the enhanced Aviation Support Package.
Mr Heng says there remains a high level of uncertainty over the future course of the outbreak, but Singapore has prepared itself well and has the resources to meet the crisis with confidence.
He says that the Government will continue to monitor the situation closely, and should it become necessary, Mr Heng adds that he is prepared to propose to the President further draws on past reserves to deal with the situation.
Measures Aimed At Raising The Overall Budget Deficit For FY2020
According to Mr Heng, the measures announced today will raise the overall Budget deficit for FY2020 to $39.2 billion or 7.9 per cent of GDP.
He adds that the situation remains highly fluid and uncertain, with significant risks, and Singapore’s fiscal position will be affected from both the revenue and expenditure sides.
He notes that in the past few years, Singapore has benefited from unexpected revenue upsides, such as exceptional statutory board contributions from MAS and increased stamp duty collections. However, the country cannot hope to rely on a repeat of this.
Instead, Singapore must be prepared to bear the downsides when they happen. He adds that the country is ready to meet such downsides, as it did not decide to spend all of the surplus collected.
With significant volatility in the economy expected in the near future, Singapore will need to continue to review its expenditure plans very carefully and adapt its responses as new developments occur.