Singapore's challenging fiscal position is the result of a global pandemic that no one could have predicted, Deputy Prime Minister Heng Swee Keat said yesterday.
But what is within the nation's control is how to use its fiscal resources well to respond to the Covid-19 crisis and prepare for the future, he told Parliament in a ministerial statement.
In total, Singapore is dedicating nearly $100 billion to support its people and businesses, said Mr Heng, who is also the Finance Minister. But the country must be careful not to spend this in a way that "squanders what generations before us have painstakingly built up", he added.
"Our guiding principle is prudence, not austerity. We will continue to invest decisively in our national priorities, with a deep commitment to leave behind a better future for our children."
Mr Heng told Parliament that Singapore's revenue position will continue to be weak for a number of years, as the effects of Covid-19 on the global economy linger and the domestic economy slows.
At the same time, expenditure will rise as the Government continues to provide support for Singaporeans and businesses.
Mr Heng added: "In short, the Government is bearing a substantial part of the economy-wide adjustment during this crisis, through reduced revenues and substantial transfers to households and businesses."
The revised operating revenue is projected to be $63.7 billion, 7.4 per cent lower than the estimates presented in the Fortitude Budget in May. The decrease is mainly due to more subdued economic growth due to Covid-19 and lower economic activity during the circuit breaker period.
Revenue collection is expected to fall across all categories. Compared with estimates made at the start of the year, goods and services tax collections are expected to fall by 14 per cent.
The Government's projected total expenditure is $102.1 billion, 7.6 per cent lower compared with the Fortitude Budget estimates.
Special transfers are up 6.3 per cent compared with the May estimate and now projected to be $54.5 billion. The $3.2 billion increase is mainly due to the extension of Jobs Support Scheme to cover wages up to next March.
Meanwhile, the Net Investment Returns Contribution, which is the return on investments of Singapore's reserves, has not changed and is estimated to be $18.6 billion.
Overall, the Government projects a deficit of $74.2 billion for its 2020 financial year, $0.1 billion less than the Fortitude Budget projection.
Mr Heng said there is no additional draw on the reserves for the latest support measures announced yesterday, which include a one-off support measure for parents of newborn babies.
The minister said there was much work to be done "to transform our economy, and to build a fair and inclusive society, a sustainable and liveable city, and a safe and secure Singapore", and that "difficult choices" have to be made to fund them sustainably through higher taxes and more effective spending.
"We will also maintain a disciplined and judicious use of borrowing, reserving its use for long-term infrastructure whose benefits are spread across many generations," he said.
The past reserves have been critical in the nation's fight against Covid-19, Mr Heng noted.
Governments around the world have committed trillions of dollars to their pandemic response, and their record-high debt levels will take generations to pay off.
"We have avoided this outcome, because successive generations have built up strong reserves ahead of this crisis," said Mr Heng.
"We must have the discipline to start earning, saving and investing for the future again. Covid-19 is not our first crisis and certainly will not be the last."