President explains her support for draw on reserves

President Halimah Yacob said yesterday it was after careful deliberations that she gave the nod to the Government's request to tap past reserves to deal with the coronavirus pandemic, describing it as a matter of survival for Singapore.

In a message read out in Parliament by Speaker Tan Chuan-Jin, she said she has given "in-principle support" for the Government to draw up to $17 billion for the supplementary budget, which the House will debate next month.

This was done after "careful deliberations, considering the grave circumstances and highly uncertain outlook", she added in a speech stating her views on the Government's proposal.

"We need to do our utmost to help our businesses and people quickly. It is a matter of survival."

The sum will help fund a second tranche of support measures announced by Deputy Prime Minister and Finance Minister Heng Swee Keat to deal with what the President described as an unparalleled and unprecedented crisis.

It follows an initial support package announced in Budget 2020 last month, and seeks to help workers and businesses tide over this period.

The President said the Government had assessed that the additional measures were needed to swiftly stabilise the economy, keep as many workers as possible in their jobs and help businesses survive.

But this $48 billion package would require it to dip into past reserves, built up over years of prudent spending and meant for rainy days. "The situation we are heading into looks more like a thunderstorm and not just a drizzle," she said.

She added that the closest historical precedent to the current crisis was the 1918 Spanish flu, which infected 500 million people, about a third of the world's population then.

"But with globalisation and more interconnected economies and people, we can expect the economic impact to be far worse this time," she added. "This downturn is likely to be deeper and last longer than Sars (severe acute respiratory syndrome) and the 2009 global financial crisis."

Singapore's past reserves are safeguarded by a so-called "two-key system", with the Government and President each holding a key. Any draw on these funds by the Government would thus require the President's consent.

President Halimah said the Government first discussed with her the option of drawing on past reserves if the Covid-19 crisis worsens, when she was briefed on this year's Budget.

During the Budget 2020 speech on Feb 18, Mr Heng said the first tranche of support measures would not draw on the reserves.

But the President hinted at this possibility on March 4, saying it was something she would consider seriously if the situation called for it.

Since then, the situation has deteriorated, with workers and companies suffering, she said, pointing out that the hotel occupancy rate was at 20 per cent, and airlines like Singapore Airlines have grounded virtually their entire fleets.

The World Health Organisation declared Covid-19 a pandemic on March 11, and around the middle of this month, Prime Minister Lee Hsien Loong had discussed with her the possibility of a second aid package.

Both the President and her Council of Presidential Advisers (CPA) were then briefed by various agencies on the details of the package.

"Let me also mention that I am satisfied with the process by which the Government has proactively reached out to me and the CPA in proposing this draw on past reserves," she said, adding that government agencies had comprehensively answered her queries and those of the CPA.

The President and the CPA - which unanimously recommended she gives her support for the draw on reserves - had agreed the priority should be to help workers keep their jobs, and companies manage their costs and cash flow, especially those in badly hit industries.

Such a draw on the reserves to fund special Budget measures has happened only once before - during the 2009 global financial crisis, when then President S R Nathan approved a draw of $4.9 billion to fund support measures.

After Parliament debates and gives the nod to the second support package, the President will scrutinise it again and give her assent. She urged MPs to debate robustly the merits of measures being proposed.

In her message, President Halimah also said she was glad Singaporeans have banded together in the fight against the virus, urging them to unite and not be fearful.

"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," she added.

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