Four Budgets projected to help avert $23.4 billion in economic losses

The Government's support measure in the four Budgets come up to $92.9 billion.
The Government's support measure in the four Budgets come up to $92.9 billion.ST PHOTO: LIM YAOHUI

SINGAPORE - Some people think the Government has spent too much, while others say it has spent too little to cushion Singapore from the impact of the coronavirus, but the four Budgets announced this year are projected to help the country avert more than $23 billion in annual economic losses in 2020 and 2021, said Deputy Prime Minister Heng Swee Keat.

He disclosed this in Parliament on Friday (June 5) when explaining the Government's approach to funding the slew of support measures in his round-up speech on the debate on the supplementary Fortitude Budget.

MPs had expressed worry about Singapore's fiscal position, wondering if the Government would top up the draw from the past reserves, and asked why it did not borrow money instead with interest rates at their lowest in years.

The Government's support measure in the four Budgets - Unity, Solidarity, Resilience and Fortitude - announced from February to May come up to $92.9 billion.

Mr Heng, who is also the Finance Minister, agreed that the total amount, at double the size of the annual budgets in preceding years, is no small commitment. But, he said, the spending was necessary to help overcome the widespread and unprecedented impact of the crisis.

Singapore's immediate priorities are to support jobs and livelihoods, he explained, and the strong response has been projected by the Monetary Authority of Singapore to help the economy avert an average output loss of 5 percentage points.

This amounts to $23.4 billion a year over this and next year.

Acknowledging MP Alex Yam's (Marsiling-Yew Tee GRC) observation that some feel the Government has been too extravagant and others that it has been too parsimonious, Mr Heng said the contrasting views showed that "crisis budgeting is anything but straightforward".

He added: "These decisions have been made after careful deliberations, based on the best information available at the time. As the Covid-19 situation develops, we have continued to enhance and refine our schemes, as evidenced by our four Budgets."

 
 
 
 

"Even then, let us stay vigilant - as I said at the outset, we are facing unprecedented levels of uncertainty across various fronts."

This uncertainty has also made contingency budgeting more crucial, he said, citing questions by MPs Liang Eng Hwa (Holland-Bukit Timah GRC) and Pritam Singh (Aljunied GRC) on how the Government would use an additional $13 billion set aside for this year in the Contingencies Funds.

Under Singapore's Constitution, Parliament can create the Contingency Funds to pay for unexpected spending that are not provided for in the Supply Act, which controls the amount of money the Government can spend in a financial year and specifies what is can be spent on.

The President must consent to an advance from the Contingencies Funds.

Since the funds are designed to be drawn on for unforeseen and urgent spending that is vital, the Government has not designated specific purposes for them, said Mr Heng.

"In sizing it, we have run some "what if" scenarios, including the possibility that we may experience a setback in our fight against Covid-19 or the global economy does much worse than currently expected," he added.

"So unlike our usual annual Budget, where we seek to provide as much detail as possible, we are setting aside a sum to meet future events or circumstances that are possible, but for which we cannot yet predict with certainty. This is indeed a special feature to allow us to respond swiftly to unforeseen developments."