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SINGAPORE — The Singapore government will allocate over $48 billion to combat the “unprecedented” COVID-19 crisis, said Deputy Prime Minister and Finance Minister Heng Swee Keat in his Ministerial Statement delivered in Parliament on Thursday (26 March).
Dubbed the Resilience Budget, the sum comes on top of the $6.4 billion Unity Budget announced by Heng in February that was meant to alleviate the economic impact of the pandemic.
“Altogether, we are dedicating close to $55 billion to support people in this battle, amounting to 11 per cent of our (gross domestic product). This is a landmark package, and a necessary response to a unique situation,” said Heng.
He added that the government has received President Halimah Yacob’s in-principle approval to draw up to $17 billion from Singapore’s past reserves to fund part of the Resilience Budget.
Heng noted that the last time the country had to tap on the past reserves was during the 2009 global financial crisis, during which then President S R Nathan approved a draw of $4.9 billion to fund the Jobs Credit Scheme and special risk-sharing initiative.
Thanks to a sharp economic recovery, however, there was no need to tap past reserves then.
Saving jobs, helping businesses
The goals of the latest supplementary Budget are threefold: to save jobs, support workers and protect livelihoods; to help enterprises overcome intermediate challenges; and to strengthen the nation’s economic and social resilience.
Among measures to protect workers’ employment, an enhanced Jobs Support Scheme (JSS) will see the government co-funding 25 per cent wages till the end of the year. This percentage will be raised to 50 per cent for firms in the food services sector and 75 per cent for those in the aviation and tourism sectors.
In total, this scheme will see $15.1 billion spent to support more than 1.9 million local employees under the JSS.
For those who find themselves unemployed due to the pandemic, an $800 monthly grant will be started from next month, while a temporarily relief fund will also be started to help families in immediate need of financial aid.
Needy Singaporeans will also receive additional cash payouts and grocery vouchers as part of enhancements to previously announced schemes, among other measures. This enhanced Care and Support Package will cost around $4.6 billion, said Heng.
Beyond wage support schemes, the government will also deferring income tax payments for local businesses from April till June. To help firms with their costs, qualifying commercial properties will be excused from paying property tax for the whole of 2020.
“I strongly urge landlords to fully pass on the rebate to tenants, by reducing rentals, to directly ease the cash flow and cost pressures faced by tenants,” said Heng.
He added that the government will be “leading by example” in this effort by enhancing rental waivers for stallholders at hawker centres managed by the National Environment Agency (NEA) and tenants under other government agencies such as HDB and the National Arts Council.
On financing businesses, Heng announced a number of enhancements to existing schemes aimed at helping local enterprises. Among these are an expanded Temporary Bridging Loan Programme (TBLP), which will now cover all enterprises with a maximum supported loan sum of $5 million, as compared with $1 million before.
Small and medium-size enterprises (SMEs) that require support beyond the TBLP can tap on the Enterprise Financing Scheme (EFC) – SME Working Capital Loan, which will see its maximum loan quantum raised to $1 million.
Meanwhile, the maximum loan quantum under the Enterprise Financing Scheme (EFS) – Trade Loan will also be raised to $10 million, with the government also raising its risk-share in such loans to 80 per cent.
“In addition, we will work with participating financial institutions to defer capital payments for one year on 4th EFS-Working Capital Loan and the TBLP loans if requested by businesses,” said Heng. He noted that these deferments would be subject to assessment by the participating financial institutions.
Another $20 billion worth of loan capital will also be set aside to “support good companies with strong capabilities”, Heng added.
The Monetary Authority of Singapore (MAS) is also working with banks and insurers to look into helping businesses and individuals facing cash flow challenges with their loan obligations and insurance premium payments.
“As the situation is fluid, we will seek to provide help where the credit needs are more acute,” said Heng.
Support for specific sectors
Noting that the COVID-19 pandemic will take “at least a year to resolve”, Heng pointed out that broad swathes of the economy have been hurt – with the worst-affected being Singapore’s aviation and tourism sectors.
Beyond an enhanced JSS for those working in the aviation line, a $350 million aviation support package will also be introduced to “fund measures such as rebates on landing and parking charges, and rental relief for airlines, ground handlers and cargo agents”, said Heng.
“This will allow Singapore to retain a minimum level of connectivity to the world during the pandemic. This is critical to enable overseas Singaporeans to return home and keep our supply lines for essential goods open,” he added.
The JSS enhancements will also be applied to licensed hotels, travel agencies, tourist attractions, cruise terminals and operators, as well as meetings, incentives, conventions and exhibitions (MICE) venues.
For the tourism sector, a sum of $90 million will also be set aside to help the industry “rebound when the time is right”, said Heng.
The JSS enhancements will also be applied to licensed hotels, travel agencies, tourist attractions, cruise terminals and operators, as well as meetings, incentives, conventions and exhibitions (MICE) venues – with the government offsetting 75 per cent of the first $4,600 of monthly wages.
Meanwhile, a $95 million Point-to-Point Support Package will be rolled out to help taxi and private hire car drivers, who have seen their incomes dwindle with falling visitor numbers. Another $55 million will also be put to providing support for the arts and culture sector.
‘Black swan’ event
On Thursday morning, the Ministry of Trade and Industry further downgraded Singapore’s 2020 GDP forecast from a range of between -0.5 per cent and 1.5 per cent, to between -4 per cent and -1 per cent.
Based on advanced GDP estimates, Singapore’s economy in the first quarter saw a 10.6 per cent quarter-on-quarter contraction, or 2.2 per cent year-on-year. This reversed the 0.6 per cent growth seen in the previous quarter.
In his speech, Heng said Singapore was experiencing a “black swan event” with the confluence of “multiple external shocks”. The pandemic’s impact has also been magnified by an already fragile world economy that has been weakened by the US-China trade conflict and an oil price war.
He noted that, overall, the Resilience Budget measures would raise Singapore’s overall budget deficit for the 2020 financial year to $39.2 billion, or 7.9 per cent of GDP.
“We are able to support this unprecedented deficit, and still remain fiscally sustainable, because we have been disciplined in the use of past reserves, tapping on it only in exceptional circumstances like these,” said Heng.
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