Another $48.4b to weather 'mighty storm' caused by virus

President gives support to draw up to $17b from past reserves | Economic growth forecast for 2020 reduced to -4% to -1% | Support package comes as 52 new coronavirus cases are reported

Setting out the grim economic outlook worldwide, Mr Heng said the global economy is now facing both supply and demand shocks. PHOTO: GOV.SG

Singapore will roll out a landmark $48.4 billion package to support businesses, workers and families as the country grapples with an unprecedented crisis fuelled by the coronavirus pandemic.

This is in addition to the $6.4 billion worth of measures it announced just over a month ago to cushion the fallout from Covid-19.

In all, Singapore has marshalled nearly $55 billion - 11 per cent of its gross domestic product - to respond to what Deputy Prime Minister Heng Swee Keat described as "the most serious crisis we have faced in a generation".

Unveiling the supplementary budget in Parliament yesterday, he said: "This is a landmark package and a necessary response to a unique situation." In economic terms alone, "this will likely be the worst economic contraction since (Singapore's) independence", he noted, as he sketched out the grim global economic outlook.

The Ministry of Trade and Industry yesterday slashed its 2020 growth forecast to a range of minus 4 per cent to minus 1 per cent, from an earlier estimate of minus 0.5 per cent to 1.5 per cent. Singapore last registered a full-year recession in 2001, when the economy contracted 1 per cent.

The pandemic, which has infected more than 410,000 people across more than 190 countries, is likely to take at least a year to be resolved and the economic repercussions would last even longer, Mr Heng said. "This extraordinary situation calls for extraordinary measures."

He said President Halimah Yacob has given her in-principle support to draw up to $17 billion from the past reserves to fund part of this "Resilience Budget". This is only the second time Singapore has drawn on its national reserves to fund special budget measures. It drew $4.9 billion in 2009 during the global financial crisis.

The $48.4 billion Resilience Budget amounts to nearly half of the Government's $106 billion Budget for this year. It is also more than double the $20.5 billion Resilience Package in the 2009 Budget.

It focuses on three areas, the first of which is to save jobs and protect livelihoods by taking "bolder and more aggressive moves".

In all, $15.1 billion will go to an enhanced Jobs Support Scheme to support 1.9 million local employees.

Mr Heng, who is also Finance Minister, said the Government will co-fund 25 per cent of wages of every employed local worker under the scheme, up from 8 per cent.

The monthly wage cap will be raised from $3,600 to $4,600, while the payouts will cover nine months instead of the initial three.

Companies in sectors worst hit by Covid-19 - aviation and tourism - will get 75 per cent wage offsets for every employed local worker.

The $1.6 billion Care and Support Package will be boosted to $4.6 billion, with cash payouts for all adult Singaporeans tripled from a range of $100 to $300, to $300 to $900, depending on income.

Mr Heng also announced measures to help businesses overcome immediate challenges, from deferring income tax payments for companies and self-employed persons to enhancing property tax rebates and rental waivers.

Another $1.9 billion has been set aside to build resilience in Singapore's economy and society.

The $48.4 billion package will raise Singapore's overall Budget deficit for the 2020 financial year to a record $39.2 billion.

"Our prudence and discipline in saving and growing our reserves give us the wherewithal to respond decisively when our nation faces extraordinary circumstances," he said, calling the Covid-19 outbreak a "black swan event that comes only once every few decades".

The Government will keep monitoring the situation closely, and he is prepared to propose a further draw on reserves if necessary.

Covid-19 is a defining challenge - one that will test Singapore's social cohesion and psychological resilience, he said. The country yesterday reported 52 new coronavirus cases, taking the total to 683.

While people are understandably fearful, they must not surrender to fear or panic, Mr Heng said.

"The Government will take all the social and economic measures we need to keep our people safe, keep our economy growing and prepare ourselves for the recovery. Now, more than ever, we need Singaporeans to be strong and ride through these challenges together."

The Government will stand with Singaporeans from all walks of life to battle the crisis. "I am confident that together, we will ride through this storm and emerge even stronger," said Mr Heng, who received a standing ovation in Parliament.

Parliament will debate the measures when it next sits on April 6.

Read Mr Heng's full speech here.

Join ST's Telegram channel and get the latest breaking news delivered to you.

A version of this article appeared in the print edition of The Straits Times on March 27, 2020, with the headline Another $48.4b to weather 'mighty storm' caused by virus. Subscribe