SINGAPORE - As widely expected, Budget 2021 presented on Tuesday (Feb 16) by Deputy Prime Minister Heng Swee Keat pivots from providing broad-based emergency support to more targeted forms of assistance, from job retention to job creation, from counter-cyclical fiscal policy in the face of a sharp gross domestic product (GDP) contraction to measures to equip companies and workers to survive and thrive in the emerging post-pandemic economy.

As is usual with Mr Heng's Budgets, the measures are wide-ranging, with a lot to unpack: There is support for businesses, workers and families; allocations for public health and safe reopening measures; incentives for job creation and innovation; charitable giving and volunteerism; support for a variety of green initiatives; extra offsets for the goods and services tax; help for communities; a new framework for government borrowing for infrastructure, and more.

The centrepiece of last year's Budget was the Jobs Support Scheme (JSS) - broad-based wage subsidies, which covered more than 150,000 employers and to which Mr Heng allocated more than $25 billion.

The JSS will now be much smaller - $700 million - and more targeted. Firms in Tier 1 sectors - those worst hit by the disruptions resulting from Covid-19, such as aviation and tourism - will get 30 per cent subsidies for wages paid from April through June, reducing to 10 per cent from July through September.

Less-affected Tier 2 sectors, such as retail, arts and culture, food services and the built environment will get wage subsidies of 10 per cent through June, while for most other firms, which are considered to be recovering, the JSS will expire at the end of next month, as announced last year.

Extending the JSS for vulnerable sectors obviously makes sense. But the fate of companies in these sectors will need to be monitored. For example, with borders still closed and visitor arrivals all but absent, some companies, especially in Tier 1 sectors, are not much better off than when the pandemic started early last year.

As Mr Heng pointed out, passenger movements at Changi were only 2 per cent of pre-Covid-19 levels at the end of January last year.

Many companies in Tier 1 sectors will struggle to survive - although he did announce some $870 million of extra relief on top of the JSS for the aviation sector and $45 million for the arts, culture and sports sectors to support businesses and the self-employed, which will help cushion the blow. Hopefully, that will be enough to tide them over till their business returns to normal.

What happens to companies in Tier 3 sectors - those least affected by the pandemic, which account for the majority of firms - will also bear watching. For many of these firms, mostly small and medium-sized enterprises (SMEs), loan forbearance by banks and relief from contractual obligations will also end this year. When that happens, it remains to be seen to what extent these firms will be able to survive on their own.

Last year, support from the JSS, banks and landlords helped to repress the level of corporate bankruptcies, which were lower than in 2019. With support withdrawn, there is a risk that bankruptcies could rise, and with it, layoffs. These trends, too, will need to be monitored.

But Mr Heng has been prudent in providing support for workers who lose their jobs or experience significant income loss.

He has allocated an extra $5.4 billion to help accelerate hiring and extended subsidies for traineeships, including for mid-career individuals.

Overall, this will support the hiring of 200,000 local workers this year and provide up to 35,000 training opportunities.

If these targets are met - which will depend on how companies react and to what extent problems of job-matching can be overcome - a lot of potential job losses will be mitigated.

The $200 million increase in the allocation for subsidies to encourage hiring senior workers and raise their retirement and re-employment ages will also help.

Many of the measures to support economic transformation are imaginative and far-reaching, such as the co-funding of the cost of trials and adoption of cutting-edge technologies like 5G, artificial intelligence and blockchain. The idea of providing companies access to chief technology officers as a service could significantly accelerate digital adoption.

The plan to set aside $500 million to be co-invested with Temasek (which will match the Government's funds on a one-for-one basis) to help large local enterprises embark on new pathways to growth could also be transformational if the targets are astutely chosen - although there is a case for promising SMEs to be included among the candidates.

One of the landmarks of Budget 2021 is the introduction of a new framework for borrowing to finance major infrastructure projects which will be called the Significant Infrastructure Government Loan Act (Singa) when it is passed by Parliament. Singapore has not borrowed for infrastructure since the 1990s (although it did in the 1980s, when the MRT was started).

The idea, which Mr Heng had floated previously, makes sense. As he mentioned in his Budget speech, it is both fair and efficient: Fair, because the benefits of such projects - like public transport systems - will be enjoyed by more than one generation, so their costs will be spread over several years rather than over just one or two Budgets. And efficient, because with interest rates at close to zero, and with Singapore having an AAA credit rating, borrowing costs will be low.

However, the question that arises is why borrowing should be confined to fund only infrastructure. There are elements of recurrent spending that can also have high returns over the medium term, such as digitisation, re-skilling and research and development.

If borrowing costs are close to zero - which is unusual - and Singapore's net debt is also zero, a case can be made that some high-return forms of recurrent spending should also be funded by borrowing rather than by drawing down on the reserves. The latter comes at the cost of foregone investment returns, whereas borrowing is almost free.

Thus, hopefully, Singa will be a first step towards a framework for borrowing for purposes that go beyond only infrastructure.

Last year's budgetary spending was considered a bazooka, which in many ways it was. But at $102.3 billion, total spending this year will actually be 8.8 per cent more than the $94.1 billion spent last year.

However, with revenues expected to be 18.6 per cent higher this year, the overall budget deficit will be $11 billion (or 2.2 per cent of GDP) compared with $64.9 billion (13.9 per cent of GDP) last year.

There will be some additional drawdown of the reserves this year, but it will be relatively modest - up to $11 billion, compared with $42.7 billion last year. It will be money well spent.

But Mr Heng is also factoring in possible downside scenarios. While his base case is economic recovery in Singapore and globally, he acknowledges that "there is a wide cone of uncertainty".

But no matter. Even if things turn out worse than expected, Singapore will "still press on to invest in new areas, so as to ride on the structural changes, transform and emerge stronger", he said - even if that means a further drawdown on past savings.

Hopefully, such a scenario will not come to pass. And hopefully, Mr Heng will get his new year wish, which he mentioned at the start of his speech: to have only one Budget this year, instead of five.