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Singapore’s Heng says monetary, fiscal policy working together

SINGAPORE - JUNE 16:  Singapore Deputy Prime Minister and Minister of Finance, Heng Swee Keat speaks during the launch of Celebrating Fathers' - Dad's Day Out at OCBC Square, Singapore Sports Hub on June 16, 2019 in Singapore.  (Photo by Suhaimi Abdullah/Getty Images for Singapore Sports Hub)
Singapore Deputy Prime Minister and Minister of Finance, Heng Swee Keat speaks during the launch of Celebrating Fathers' - Dad's Day Out, June 16, 2019 (PHOTO: Suhaimi Abdullah/Getty Images for Singapore Sports Hub)

By Michelle Jamrisko and Melissa Cheok

(Bloomberg) -- Singapore’s Deputy Prime Minister Heng Swee Keat said monetary and fiscal policy are working together to support the economy, and the exchange rate band has sufficient room for the currency to move.

The government is open to “upsides as well as downsides” on its growth outlook for this year, and therefore has to be prepared for the possibility of a recession, Heng, who is also finance minister, told Bloomberg Television’s Haslinda Amin Wednesday.

Heng unveiled plans late Tuesday to widen Singapore’s budget deficit to the most since at least 1997 to tackle immediate headwinds from the coronavirus outbreak as well as broader growth risks. The city state, which has more than 80 cases of the virus, this week lowered its growth outlook for the year to a range of -0.5% to 1.5% as it braces for a hit to tourism and trade.

The Monetary Authority of Singapore, which uses the exchange rate as its main policy tool, said on Feb. 5 there was room within its exchange-rate band to accommodate some weakness in the currency to counter the coronavirus outbreak. The central bank’s next scheduled policy decision is in April.

The deputy prime minister said China is taking decisive steps to deal with the outbreak and the stimulus measures it’s taken to support the economy are “positive.”

Singapore’s budget includes S$800 million ($575 million) in dedicated funding to mitigate the virus impact, as well as a S$5.6 billion package to stabilize the economy via support to businesses and households.

“The government has been very prudent in the first few years of our term and I have enough firepower to deal with this for now,” Heng said.

© 2020 Bloomberg L.P.