Resilience Budget

Forum: Strong reserves allow for robust fiscal measures

I applaud the Resilience Budget. At seven times the $6.4 billion worth of measures unveiled in last month's Singapore Budget, the Resilience Budget is robust and impactful, and will go far to support Singaporeans and businesses through these unprecedented times.

It will also be a buffer against the economic repercussions of the Covid-19 pandemic (Singapore Govt pumps in $48b more to fight Covid-19 fallout, on top of $6.4b already announced, ST Online, March 27).

Deputy Prime Minister Heng Swee Keat's remarks that Singapore's reserves were built up over the years to cater for rainy days struck a chord with me. The reason why robust fiscal measures such as the Resilience Budget are possible is due to financial discipline and prudence, and growing Singapore's reserves at a strong rate all this time.

Had we, for whatever reasons, rested on our laurels and grown our reserves at a slower rate as was suggested before (Grow reserves at slower rate to invest in S'poreans: Leon Perera, Feb 28), the Resilience Budget would not be possible, and we would now be in economic dire straits due to the Covid-19 pandemic.

A strong reserve growth rate is a powerful macroeconomic mechanism for achieving economic stability and strong economic growth, especially for a resource-scarce country such as Singapore.

Growing reserves slower could impair Singapore's ability to attract foreign direct investments, lead to high capital flight and, moreover, potentially make it easier for markets to rout the Singapore dollar by mounting speculative attacks during periods of uncertainty and vulnerability.

We are the stewards of our reserves for future generations. Let's stand united and in solidarity with our leaders in the fight against the Covid-19 pandemic so that we can recover quickly and get back to work when it's finally over, and not allow it to derail Singapore's economic growth story.

When the next crisis strikes, our reserves will be all that we have to weather us through the storm, and that will depend on how strongly we grow our reserves.

Woon Wee Min

A version of this article appeared in the print edition of The Straits Times on March 28, 2020, with the headline 'Strong reserves allow for robust fiscal measures'. Print Edition | Subscribe