Singapore said that it plans to spend S$11 billion (US$8.3 billion) to help households and businesses rebound from the COVID-19 pandemic after the economy suffered its worst year since independence.
“Even as our economy recovers gradually and some sectors grow well, some other sectors remain stressed,” Singaporean Deputy Prime Minister Heng Swee Keat (王瑞傑) told Parliament yesterday in his annual budget speech.
Heng, who is also the Singaporean minister of finance, said that the government had pivoted rapidly from focusing on pandemic relief to using the crisis as an opportunity to restructure the economy.
“What continue to distinguish Singapore are our investments in the future,” he said.
The address comes after Singapore’s economy endured its biggest-ever contraction last year, with GDP shrinking 5.4 percent.
Growth is expected to rebound to 4 to 6 percent this year, but the outlook remains challenging for some important sectors, including aviation, transport and hospitality.
The benchmark Straits Times Index yesterday added 0.4 percent, up only marginally from its level before the budget speech began. The local currency was largely unchanged at 1.3239 to the US dollar.
Normally fiscally conservative, the challenges of the pandemic are forcing the city-state to run an overall budget deficit again, although narrower than the record high of 13.9 percent of GDP in the 2020 financial year.
That compares with the global average for overall fiscal deficits of 11.8 percent of GDP last year and 8.5 percent this year, IMF projections show.
Before Heng’s remarks, analysts in a Bloomberg survey had projected that the city-state’s deficit would narrow to 4 percent in the financial year starting April 1.
The expected narrower deficit reflects the effects of earlier tranches of spending, a daily local caseload near zero, a vaccination drive and medium-term concerns about keeping spending more in line with revenue.
Officials have signaled for months that they were ready to provide more aid after pledging about S$100 billion last year, particularly for vulnerable sectors.
The budget for the 2021 financial year includes a six-month extension of wage subsidies to certain vulnerable sectors, including aviation and tourism, at a cost of S$700 million.
More key points from Heng’s remarks:
Heng said that the COVID-19 relief package would include S$4.8 billion for public health and safe reopening measures, while the aviation sector would receive support and cost relief worth S$870 million.
The government is to set aside US$500 million to invest together with Temasek Holdings Pte, and spend S$24 billion over the next three years to boost skills and build up workers and firms, Heng said.
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