The Singapore government has tagged on a fourth round of fiscal support measures amounting to S$33 billion in the latest Fortitude Budget to further aid local businesses, preserve jobs and support households as well as fund frontline agencies in the fight against the coronavirus (COVID-19).
It comes on the heels of the earlier Unity, Resilience and Solidarity budgets which added up to S$59.9 billion or 12% of GDP for FY2020.
The new fiscal package raises the overall budget deficit to S$74.3 billion (15.4% of GDP), the largest in Singapore’s history. It will tap an additional S$31 billion from the national reserves estimated at S$424.8 billion as of April 2020.
A sizeable proportion of the Fortitude Budget will be used to extend job protection through co-payments that will not only help to retain but also retrain workers even as the current Circuit Breaker measures are eased under Phase 1 on 2 June 2020.
Measures in the fourth stimulus package include:
The measures are certainly welcomed as Singapore will likely be mired in a recession with the Ministry of Trade and Industry (MTI) already downgrading the growth outlook this year to a range of -4.0% to -7.0%, down from -1.0% to -4.0% earlier. Resident unemployment had risen to 3.3% in March, the highest in a decade with more retrenchments looming in the months ahead.
The Fortitude Budget underscores the priority given not only to job preservation but also creation with the target of generating some 95,000 jobs in both public and private sectors with the set-up of an Emerging Stronger Taskforce to accelerate the process.
We view the latest budgetary measures as a clear, decisive and robust response to prepare Singapore for the challenges in the ‘new normal’ post-COVID-19 environment. As PM Lee Hsien Loong has duly noted, “We are in a strong position to overcome this crisis and emerge stronger.”
Beyond the pandemic, other clouds remain over the horizon, such as the new phase in US-China tensions in an increasingly de-globalised economic landscape. Any further disruption or clogging of global trade flows will definitely have headwinds impact on the Republic’s growth rate which we currently maintain at -4% for 2020.
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