Second withdrawal of $31 billion from Singapore's reserves to cushion coronavirus impact

The Government had used up almost all of its accumulated surpluses from its current term.
The Government had used up almost all of its accumulated surpluses from its current term.ST PHOTO: TIMOTHY DAVID

SINGAPORE - Singapore will draw another $31 billion from its reserves in an extraordinary move to fund a fourth package of measures to cushion the people and the economy from the effects of the coronavirus pandemic.

This is the second draw on the reserves announced in a span of two months, reflecting the profound impact the virus has had on Singapore's open economy as businesses and industrial activities grind to a halt all over the world.

It brings to $52 billion the amount of past savings tapped this financial year.

Explaining the decision to dip into the savings again, Deputy Prime Minister and Finance Minister Heng Swee Keat told Parliament on Tuesday (May 26) that it is "necessitated by the very exceptional nature of the Covid-19 crisis."

To fund the three Budgets already announced this year, the Government had used up almost all of its accumulated surpluses from its current term, he said.

"But what we need to deal effectively with Covid-19 has grown so much that we have no choice but to draw on our past reserves," he added.

The Government's current five-year term will end by April 14 next year.

Mr Heng said he had thought long and hard about the move and had gone through rounds and rounds of deliberations and discussions with both the Finance Ministry's staff and and his Cabinet colleagues before seeking President Halimah Yacob's approval.

President Halimah, in consultation with the Council of Presidential Advisers (CPA), has given her in-principle approval.

 
 
 

Already, an unprecedented move was made earlier this year to dip into the past accumulated savings to the tune of $21 billion.

The amount far exceeds the $4.9 billion drawn in 2009 for the global financial crisis, although the final sum used was $4 billion.

Mr Heng said the $21 billion has gone towards saving jobs, keeping the economy going and giving direct aid to Singaporeans during this period.

Since then, the impact of the pandemic has deepened, with the number of coronavirus cases worldwide exceeding five million, and the death toll rising more than 340,000.

The number of cases in Singapore has crossed 30,000, with 23 dead, as the country prepares to lift restrictions on movements and business activities after a circuit breaker period that kicked in 50 days ago.

"Lives and livelihoods are at stake, and we are moving to secure our future," said Mr Heng.

"After a challenging circuit breaker period, we are now preparing to reopen our economy. To do so in a safe and calibrated manner, and to continue to support our people, we are proposing a further draw on our past reserves."

He added that Prime Minister Lee Hsien Loong had met President Halimah to share the Government's considerations.

Mr Heng, along with Health Minister Gan Kim Yong, National Development Lawrence Wong, Trade and Industry Minister Chan Chun Sing, and Minister in the Prime Minister's Office Indranee Rajah, who are all part of the multi-ministry task force set up to tackle the virus, had also briefed the CPA.

In a Facebook post on Monday, Madam Halimah had said: "Having deliberated and considered the recommendation of the CPA, I am satisfied that the fourth support package is necessary."

Over the years, the Government's strict adherence to the policy of not touching the past reserves has come under some criticism by those who feel more of it should be used to fund current needs.

Reiterating once again the importance of this policy, Mr Heng said the strategic asset, built up through the prudence and hard work of generations of Singaporeans, has been critical in allowing the country to respond comprehensively and robustly in the fight against Covid-19.

 
 
 

He pledged to deploy the money "in a deliberate manner, and at decisive moments".

"I am grateful that we have the fiscal resources to mount this response, and the unity, resilience and solidarity of our people to battle this together. We have a responsibility to make the best use of these resources, to keep our people safe, to save jobs and transform businesses, and to emerge stronger," he said.

"Every dollar that we have saved has been saved by careful counting over the years. In spending this national savings now, we must make every dollar spent count."