Singapore Budget 2020: $6.4b to deal with virus crisis, economic uncertainties

Longer-term measures include $5b to fight climate change, $8.3b to transform economy

A $4 billion package will be rolled out to keep workers in jobs, help companies with their cash flow and provide additional support for sectors directly affected by the coronavirus outbreak. ST PHOTO: JASON QUAH

Some $6.4 billion has been set aside in the Budget to support businesses, workers, families and front-line agencies, as Singapore grapples with the economic fallout from the ongoing coronavirus outbreak.

Deputy Prime Minister Heng Swee Keat yesterday announced various measures to stabilise the country's economy and cushion the impact of the outbreak, which has hit tourism arrivals and disrupted global supply chains.

A $4 billion package will be rolled out to keep workers in jobs, help companies with their cash flow and provide additional support for sectors directly affected by the coronavirus disease, known as Covid-19.

Households will get additional help with the cost of living from a special $1.6 billion package, with those less well-off receiving more.

This includes a one-off cash payout ranging from $100 to $300 for every Singaporean aged 21 and above.

Apart from this, $800 million in extra funding will be given to front-line agencies fighting the outbreak, taking the support kitty to $6.4 billion.

"We will put in every effort to slow down the spread of the virus," pledged Mr Heng, who is also Finance Minister.

The measures are part of a $106 billion Budget that aims to position Singapore for the future, while helping its people navigate the near-term challenges posed by the outbreak.

To that end, Mr Heng said the Budget will be "more expansionary", with an expected deficit of $10.9 billion, or 2.1 per cent of gross domestic product (GDP).

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In comparison, during the global financial crisis, Singapore had a Budget in 2009 which was projected to come in with a deficit of $8.7 billion, although this was later revised down to $0.82 billion, or 0.3 per cent of GDP.

But Mr Heng noted that the Government has accumulated sufficient surplus to fund the projected deficit without drawing on past reserves.

Ministries' total spending is forecast to rise 7 per cent from the 2019 financial year to $83.6 billion.

Mr Heng made plain that the coronavirus outbreak will certainly impact Singapore's economy, which has seen declining visitor arrivals and air traffic through Changi Airport, along with falling hotel occupancy rates. The country had 81 confirmed coronavirus cases as of yesterday.

While it is not clear how badly the outbreak will hit the global economy, he added that "we must be prepared that the economic impact may be worse than we projected".

The measures to deal with immediate economic uncertainties include a Jobs Support Scheme that will offset 8 per cent of every employed local worker's wages for three months, capped at $3,600 a month, per worker. This will benefit all firms, and cost $1.3 billion.

There will be additional support for sectors directly affected by the outbreak, such as tourism, aviation and retail. These include property tax and rental rebates.

"We will continue to monitor the situation closely. If needed, we can and are prepared to do more," Mr Heng said.

In his 21/4-hour speech, he went beyond the measures to tackle the current downturn to outline longer-term measures to grow the economy, transform enterprises and develop the workforce. He said $8.3 billion has been allocated over the next three years to do so.

To encourage workers to upgrade their skills, the Government will make a one-off $500 top-up to the SkillsFuture account of every Singaporean aged 25 and above this year. Midcareer workers aged 40 to 60 will receive an additional $500 on top of this, to help them reskill.

The credit from both top-ups will expire in about five years, to nudge Singaporeans to make use of them.

The Deputy Prime Minister also flagged three major challenges ahead - climate change, security and fiscal sustainability.

In line with tackling climate change, he said Singapore's vision is to phase out internal combustion engine vehicles and have all vehicles run on cleaner energy by 2040.

A scheme to promote cleaner light goods vehicles will be rolled out and electric vehicle charging points ramped up islandwide.

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Some $5 billion will be injected into a new Coastal and Flood Protection Fund as well.

Concluding, he said: "Our nation has built up the capital - financial, human and social - to go the distance. The Singapore spirit is strong and growing. Together, we will advance, as one Singapore."

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A version of this article appeared in the print edition of The Straits Times on February 19, 2020, with the headline $6.4b to deal with virus crisis, economic uncertainties. Subscribe