SINGAPORE (BLOOMBERG) - Singapore's Budget provides a "fairly large fiscal boost" to the economy to counter the impact of the coronavirus, with the Government still expecting positive growth for the year, Deputy Prime Minister Heng Swee Keat said on Wednesday (Feb 19).
The authorities are open to "upsides as well as downsides" to its growth outlook, and therefore have to be prepared for the possibility of a recession, Mr Heng, who is also Finance Minister, told Bloomberg Television.
"Our central scenario is still that we will have some positive growth this year," he said. "It all depends on what happens to the global economy in the coming months and that, in turn, depends on how far the virus outbreak spreads and how severe it is."
Singapore, which has more than 80 cases of the coronavirus, this week lowered its growth outlook for the year to a range of -0.5 per cent to 1.5 per cent as it braces for a hit to tourism and trade. In his Budget speech on Tuesday, Mr Heng announced plans to widen the fiscal deficit to the most since at least 1997, with $6.4 billion in dedicated support to shore up the economy.
Mr Heng said monetary and fiscal policies are working together to bolster the economy. The Monetary Authority of Singapore, which uses the exchange rate as its main policy tool, said on Feb 5 that there was room within its exchange-rate band to accommodate some weakness in the currency to counter the coronavirus outbreak. The central bank's next scheduled policy decision is in April.
Singapore's Budget includes $800 million to front-line agencies that are fighting the virus, as well as a $5.6 billion package to stabilise the economy via support to businesses and households.
"The Government has been very prudent in the first few years of our term and I have enough firepower to deal with this for now," Mr Heng said.
He added that China is taking decisive steps to manage the virus outbreak and the stimulus measures it has taken to support the economy are "positive".
Mr Heng also made the following comments in the interview on Wednesday:
"It is because of our fiscal prudence that we have these large reserves that we could use in this current term of government. And at the same time, we also have our past reserves if we ever had to call on them, but in which case we would need the approval of the president. But for now, the Government has been very prudent in the first few years of our term and I have enough firepower to deal with this for now."
On whether there are plans to remove the additional buyer's stamp duty: "No, it is not on our radar at this point because I think, as I said, we need to make sure we stabilise the economy and we address long-term structural issues."
"Long-term structural issues will be first; technology and innovation. This is going to power growth in the next phase. Not just for Singapore, but for the global economy. And we want to make sure that we are in that. Very importantly, I would like Singapore to be a global Asian node of technology innovation and enterprise."
Mr Heng declined to give any indication of the timeline for the next general elections, which are due by April 2021.
“First and foremost, it is important for my party to win the support of our people,” said Mr Heng. “We’ll let Singaporean voters decide on which is the party that is best able to take them forward, able to navigate through these very difficult times.”
Promoted to deputy prime minister last year, Mr Heng is seen as the likely successor to 68-year-old Prime Minister Lee Hsien Loong, who last month reiterated his plans to step aside by the time he turns 70.