Singapore expected to unveil mammoth budget to counter coronavirus impact
By Francis Kan
SINGAPORE — With the Singapore economy expected to take a big hit from the Covid-19 virus outbreak, market watchers are expecting the government to dig deep into their coffers to offer support where it is needed when it unveils Budget 2020 on Feb. 18.
Prime Minister Lee Hsien Loong said on Feb. 14 that the economic impact of the outbreak over the next few quarters will be significant; adding that it’s “possible” the economy will fall into recession.
DBS economists expect tourist arrivals to decline by 1 million - equal to about a S$1 billion loss in spending - for every three months travel bans are in place. As a result, the bank downgraded its 2020 growth forecast for Singapore to 0.9 per cent from 1.4 per cent previously.
From support for businesses and workers, to help for seniors and the environment, here is some of what economists, business groups and Singaporeans expect - or hope - to see in Budget 2020.
Biggest Budget in a decade
DBS forecasts that Budget 2020 will incur an overall deficit of about S$7.9 billion as the government spends big to fight the negative impact of Covid-19, even as it keeps an eye on the longer-term transformation of the economy. If DBS is right, it will be the highest Budget allocation since FY09, when the government planned for a deficit of S$8.7 billion during the Global Financial Crisis. With an accumulated surplus of at least S$15.6bn in its Current Reserves, the government of today has plenty of fiscal firepower to finance a large deficit.
Strong package to fight Covid-19
A major focus of Budget 2020 will be the "strong" economic package that the government has indicated it will announce to cushion the economic impact from Covid-19. While no details have been released, the S$239 million SARS relief package unveiled in 2003 comprised of property tax rebates and a bridging loan programme for SMEs to help with short-term cash flow problems.
Support for workers
A focus on upgrading the skills of Singaporean workers is likely to feature again in this year’s Budget. Deputy Prime Minister Heng Swee Keat has already said that the government plans to enhance the SkillsFuture initiative that was launched four years ago.
Some, including Labour MP Patrick Tay, hope that this will involve a top-up of SkillsFuture credits for those who pursuing further training. He is also calling for more protection and employment support for professionals, managers and executives. However, Dilys Boey of Ernst & Young says that any additional funds for worker training should be more targeted. This could mean being more selective about the courses SkillsFuture Credits can be used for, or who is eligible for the top-ups.
Calls for tax relief to counter short-term pressures
The local business community are hoping for short-term relief in Budget 2020, calling for it even before Covid-19. According to the findings of the Singapore Business Federation’s National Business Survey, released in January, companies here cited tax relief as their top wish for Budget 2020, as they continue to face rising operating costs and wages.
Focus on sustainability
Beyond calls for immediate support, some have urged the government to not lose its focus on addressing longer-term issues, such as economic transformation and the environment. PwC Singapore, for one, has placed environmental protection on its Budget wishlist. Among other proposals, the consultancy has asked the government to encourage green financing by giving enhanced tax deductions to companies issuing green bonds.
Support for seniors and families
Moving away from businesses and workers, many Singaporeans have asked for more financial support for seniors in next week’s Budget in the form of enhancements to the Central Provident Fund and Medisave schemes, according to findings from the government feedback unit Reach and the People's Association.
Singaporeans also called on the government to support those raising children and caring for ageing parents, as well as for a comprehensive GST support package, especially for lower- and middle-income families.
Meanwhile, the Association of Women for Action and Research asked for a monthly income for those caring for older family members, even if they are already working.
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