This is my first message to Parliament as custodian of the Government's past reserves.
Shortly after this message, Deputy Prime Minister Heng Swee Keat will be announcing the Government's proposed measures under the second assistance package in response to the Covid-19 pandemic. The package, which is before this House for debate, is a substantial one. The Government has tabled a Supplementary Supply Bill to support the package, which is likely to result in a draw on past reserves, and I have given my in-principle support for the draw.
Since we established the reserves protection framework in 1991, we have had to draw on past reserves just once, during the global financial crisis in 2009.
Then President S R Nathan approved a draw of $4.9 billion to fund two temporary and extraordinary measures. But every situation is unique. Our current crisis is unparalleled in modern history. Governments around the world have had to think hard and make unprecedented moves over the past few weeks, such as locking down an entire country.
Similarly, my in-principle support for the Government's present proposal was given after careful deliberations, considering the grave circumstances and highly uncertain outlook.
We ended 2019 on a cautiously optimistic note. The Covid-19 outbreak totally changed that outlook. By mid-February, the situation was already rather gloomy.
The Ministry of Trade and Industry had already had to downgrade the gross domestic product forecast by one full percentage point at that time.
When the Government came to brief me about Budget 2020, we discussed the option of drawing on past reserves if the situation worsens, but did not do it immediately as current reserves were still sufficient for the scale of the package envisaged then.
However, since then, we have had successive waves of bad news.
Just when the Covid-19 situation in China seemed to be stabilising, a new wave of cases started in the rest of the world. Europe has become a new epicentre. Cases in the United States are growing quickly too.
The World Health Organisation has declared the outbreak a pandemic. The drastic measures taken by countries to protect borders and lock down societies have had serious repercussions.
Already overdue for a market correction, share markets worldwide have fallen sharply.
We are faced with a double whammy of a worldwide public health emergency and a deepening economic crisis. This downturn is likely to be deeper and last longer than Sars and the 2009 global financial crisis. This economic shock is totally different from an ordinary business cycle downturn.
From talking to Singaporeans and unions, it is clear to me that companies and workers are suffering badly. For example, the hotel occupancy rate is only 20 per cent currently. Many airlines, including SIA, have grounded almost all their planes due to massive flight cancellations. Many self-employed workers in the gig economy are not getting jobs.
Production lines in factories are stalling due to supply chain disruptions, exacerbating their already tight cash-flow situation.
We need to do our utmost to help our businesses and people quickly.
It is a matter of survival.
With the unprecedented and rapidly worsening of the global situation, the Government has assessed that we need to implement a substantial, second support package swiftly to stabilise our economy, keep as many workers as possible employed and help viable enterprises survive.
Our reserves were built up over the years through prudent spending, and were set aside precisely to cater for rainy days. The situation we are heading into looks more like a thunderstorm than a drizzle.
To arrive at my in-principle decision, I reviewed the Government's proposal with my Council of Presidential Advisers. We agreed that we need to help companies with their costs and cash flow, to keep them afloat in the meantime. This is especially so for aviation, travel and tourism, and related industries, which are especially badly hit. We also agree that our priority should be to help workers keep their jobs.
We are facing an unprecedented crisis. The closest historical precedent was the Spanish Flu in 1918. But with globalisation and more interconnected economies and people, we can expect the economic impact to be far worse this time. Covid-19 causes death and suffering, so an economic cure, though necessary, is not sufficient. We also need a medical solution, as well as psychological and social ones.
Understandably, we are uncertain about what lies ahead of us. But we should not be fearful. We have done well as a nation.
Internationally, our response to Covid-19 has been viewed as being systematic and effective. I am also glad that Singapore has banded together in fighting this disease.
Singaporeans are responding calmly and responsibly. The Government has been open and transparent. And the community has stepped up to help those who may be more vulnerable. In these worst of times, I am heartened to see the best of Singaporeans.
I am confident that we will be able to get through this crisis together. It is not anybody's wish for a crisis to befall us, but from time to time, it is inevitable. When it happens, how we respond will define us as a nation. So, let us work together as one people and support one another on this journey. Let us overcome the crisis and emerge stronger and more cohesive as a nation.