SINGAPORE - The $1.5 billion support package to cushion the impact of inflation does not require a further draw on past reserves, and will be funded out of the Government's existing Budget, said Deputy Prime Minister and Finance Minister Lawrence Wong on Tuesday (June 21).
"This is because we expect our fiscal out-turn for fiscal year 2021 to improve compared to the estimates at Budget 2022," he added.
Elaborating, he said the latest slew of measures to help Singaporeans and businesses cope with rising prices comes on the back of higher revenues collected in fiscal year 2021 from a stronger-than-expected economic recovery.
At the same time, the Government had also used less of the budget set aside for Covid-19-related spending because the impact of the Omicron variant turned out to be less severe than anticipated, he said.
As it is also still early in the financial year and Parliament had approved this year's Budget just three months ago, ministries will reprioritise their spending within their existing budgets to fund this support package, he added.
As such, the Government will not introduce a Supplementary Budget at this point, he said. A Supplementary Budget has to be passed when there is a request for more funding in a financial year after the Budget has been passed.
In the past three financial years from 2020 to 2022, the Government made a total expected draw of $42.9 billion on past reserves to fund various measures to protect lives and livelihoods as the pandemic plunged the world into deep recession.
The expected draw on the reserves is less than the initial sum of $52 billion that the Government projected it would need at the onset of the pandemic.
For both the 2020 and 2021 financial years, it ended up needing less than the original amount of reserves it was looking to draw.
In FY2020, the Government had planned to draw up to $52 billion through the Resilience, Solidarity and Fortitude supplementary budgets.
But it now expects to use just $31.9 billion as Singapore managed to avert worse public health outcomes and also had a stronger-than-expected economic recovery, Mr Wong had said in February when delivering the Budget statement.
Likewise, in FY2021, the Government had planned to draw $11 billion to pay for the Covid-19 Resilience Package, but now expects to draw just $5 billion due to a reduced expenditure of $10 billion for the package, as well as ministries not needing to spend as much because of projects being delayed by the pandemic.
Mr Wong had also said in February that the Government had received extra revenue from one-off revenue upsides, including from vehicle quota premiums and stamp duties.
The money from these budgets had gone towards paying for public health measures to curb the spread of Covid-19, as well as measures such as the Jobs Support Scheme, which has disbursed some $28.1 billion since 2020, and the Care and Support Package, which disbursed $1.5 billion in cash to Singaporeans.
Announcing the new measures on Tuesday to help people cope with inflation, Mr Wong reiterated his promise made during this year's Budget that the Government will take further action to protect jobs and help with increased costs should the situation worsen.
"We have to brace ourselves for a bumpy ride ahead. The situation is highly fluid and the Government will continue to monitor it closely and adjust our measures and programmes as necessary," he said.
But Mr Wong also emphasised the importance of "doing things in a responsible and sustainable manner for the medium to longer term".
Inflation is not the only challenge confronting Singapore, and the country also has to adapt to major structural changes, such as rising temperatures caused by climate change and a more bifurcated world caused by geopolitical contestation and tensions, he said.
This is why it is necessary for Singapore to accelerate and not slow down its economic reforms.
"It's also important that we move forward in a fiscally responsible and sustainable manner, and this will ensure that we are in a strong economic and fiscal position to deal with any future challenges ahead, and also to seize the opportunities in this new environment," he added.