For a second year in a row, Singapore will dip into its past savings to pay for measures needed to fight Covid-19, with a draw of $1.7 billion on the reserves.
The amount will be combined with $9.3 billion that was drawn last year but not used, with all $11 billion going towards funding the Covid-19 Resilience Package.
Altogether, the expected draw on the reserves over the two financial years will come up to a total of $53.7 billion.
Announcing this in his Budget statement yesterday, Deputy Prime Minister Heng Swee Keat said running a fiscal deficit to support targeted relief was warranted in the immediate term.
Even as Singapore's economy reopens, there are badly hit sectors like aviation that are still in the doldrums and segments of society that still need help.
At the same time, public health measures have to continue in the global battle against Covid-19, with success uncertain.
Explaining the decision to fund the Covid-19 Resilience Package by tapping the reserves, Mr Heng noted that the measures were extraordinary and temporary.
He said: "This is the second consecutive financial year where we will be drawing on our past reserves. This is necessary, given the exceptional circumstances we are in.
"We are extremely fortunate to be able to tap our strategic assets and deploy the resources required to deal decisively with Covid-19 and the considerable uncertainties that lie ahead. We should never take our reserves for granted."
He also said that President Halimah Yacob has given her in-principle support for the move.
In a Facebook post yesterday, Madam Halimah said Mr Heng briefed her and the Council of Presidential Advisers last month.
She said she agreed with the Government's proposal, given the exceptional circumstances, and had approved, in principle, the use of $11 billion from the reserves to fund the short-term relief measures.
"After Parliament has debated the Budget, I will formally consider the proposal before giving my assent to the Supply Bill," she said.
"The road ahead is going to be challenging and uncertain. We must remain resolute in our fight against Covid-19.
"At the same time, the post-Covid-19 world presents us with new opportunities in innovation and transformation. How we continue to respond to the crisis will determine our future."
Over five Budgets last year, the Government had proposed a draw of up to $52 billion on the reserves to tackle the challenges brought by Covid-19, but used only $42.7 billion.
Mr Heng said that as people and businesses here had adapted effectively to the situation, the Government was able to bring the pandemic largely under control and did not need to spend as much on some of the public health measures as it had anticipated.
Casting his gaze ahead, he said the Government's priorities in the medium to long term are to invest strategically for growth, press on with economic transformation and lay the groundwork to position Singapore for the future.
He reiterated the need to balance between immediate and long-term needs, making it clear that Singapore would have to return to running balanced Budgets beyond the current crisis.
"It was fiscal prudence and discipline that allowed us to accumulate our national reserves, which has enabled us to respond decisively to this crisis," he said.
He noted that Singapore's recurrent spending needs had already been going up before Covid-19 hit, and that the fundamental drivers of these fiscal trends have not changed.
They include an ageing po-pulation, maturing society, and growing healthcare and social spending.
Stressing the importance of meeting such structural needs in a disciplined and sustainable way, he said: "Our fiscal approach must strike a careful balance between addressing our immediate needs and meeting our longer-term structural needs in a responsible manner."
