The additional support package to help companies and workers affected by the latest Covid-19 restrictions is expected to cost $1.2 billion, with the amount covered through the reallocation of funds, Finance Minister Lawrence Wong told Parliament yesterday.
There will be no need to draw from the reserves again, he said, noting that Singapore is already expected to draw up to $53.7 billion of it, an amount "which we are not likely to be able to put back any time soon, if at all".
Half of the $1.2 billion will be covered by funds originally earmarked for the Deep Tunnel Sewerage System and North-South Corridor projects. Singapore will instead borrow to finance these projects, under the Significant Infrastructure Government Loan Act that allows borrowing to finance long-term infrastructure.
The remaining $0.6 billion will be reallocated from development expenditure that was underutilised mainly because of project delays arising from Covid-19.
In his first ministerial statement on government spending since becoming Finance Minister in May, Mr Wong said the Government would not hesitate to use its fiscal firepower to protect lives and livelihoods, but stressed that any spending must not unfairly burden future generations.
"Our expenditure in financial year 2020 was the highest ever in the history of our country; and this unprecedented fiscal response has also led to the largest Budget deficit in Singapore's history," he said.
"Now that things are better, we should refrain from drawing further on past reserves. Instead, we will fund the support measures using resources that were approved in this year's Budget."
He pointed out that the high levels of government spending worldwide could saddle future generations with crippling debt.
While Singapore has been able to buck this trend owing to the foresight and fiscal prudence of its previous generations, it has had to draw on past reserves in two consecutive financial years, he noted.
It initially did so last year at the height of the pandemic when the economy suffered its worst recession and shrank by 5.4 per cent, and again at the start of financial year 2021 to pay for continuing Covid-19 measures.
A spike in unlinked Covid-19 community cases, with clusters fuelled by the more transmissible Delta variant of the coronavirus, forced the country into phase two (heightened alert) on May 16, with restrictions on dining in at food outlets and social gatherings.
The restrictions were eased from June 14, when the country moved into phase three (heightened alert).
Mr Wong said that Singapore is relatively well placed to deal with the pandemic now, with the economy steadily improving, strong testing and tracing capabilities, as well as a vaccination programme that is making good progress.
He said most parts of the economy continued to operate over the past two months, unlike during the circuit breaker period from April to June last year, when "literally the entire economy was shut down".
With infection numbers having been brought down, Singapore expects to open up further, with larger groups of five people allowed to dine at food outlets from next Monday, he said.
Yesterday, he also announced the extension of the Temporary Bridging Loan Programme and Enhanced Enterprise Financing Scheme - Trade Loan for an additional six months from Oct 1 to March 31 next year, to help small and medium-sized enterprises tide over cash flow problems as they prepare for the new normal.
Other support measures, announced on May 28 to help businesses and workers worst hit by the latest round of restrictions, include an extension of the Jobs Support Scheme (JSS) to food and beverage outlets, gyms and performing arts organisations, among others, which have been badly hit. They received JSS support of 50 per cent.
Rental relief was also provided for businesses, while targeted help was given to affected groups and workers such as taxi and private-hire car drivers and those who are self-employed.
JSS support will be tapered off to 10 per cent for two weeks from next Monday, as Singapore prepares to reopen its economy further.
Parliament will debate the additional support package on July 26.