Singapore sets aside over $8 billion in 2021 budget for new Covid support package
- Singapore's government announced a new fiscal package worth 11 billion Singapore dollars ($8.3 billion) to support Covid vaccination efforts and economic segments hit hard in the pandemic.
- Finance Minister Heng Swee Keat said the government is expected to tap 53.7 billion Singapore dollars ($40.6 billion) from its reserves to fund Covid support measures in 2020 and 2021.
SINGAPORE — The Singapore government on Tuesday announced a new fiscal package worth 11 billion Singapore dollars ($8.3 billion) to support Covid vaccination efforts and economic segments hit hard in the pandemic.
Finance Minister Heng Swee Keat, in his annual budget speech, outlined how the funds will be used:
- About 4.8 billion Singapore dollars ($3.6 billion) are meant for public health and safe reopening measures, including vaccination, contract tracing and testing capabilities.
- Extend several existing schemes to subsidize wages of workers and provide financing to businesses.
- Targeted support for select sectors such as aviation, land transportation and arts.
Singapore's government last year committed more than 90 billion Singapore dollars ($68 billion) — around 20% of GDP — to soften the pandemic's economic hit.
Those measures, along with the central bank's monetary support, helped Singapore to "avoid a worse recession, avert job losses and mitigate inequality," said Heng.
He added that if not for the measures, the Southeast Asian economy would have shrunk by at least 12.4% last year. That's more than double the 5.4% contraction — still the worst-ever economic recession — that the country recorded in 2020.
Singapore's economy is expected to grow 4% to 6% this year, according to the government's forecast.
The city-state was one of the first countries outside China to report cases of Covid-19 in early 2020. The country went into a partial lockdown — locally referred to as a "circuit breaker" — in April last year to stem the virus spread.
The economy has gradually reopened since June and the number of newly confirmed infections has slowed down in recent months. As of Monday, Singapore has reported more than 59,800 cumulative cases of Covid-19 and 29 deaths, data by the health ministry showed.
Government spending plans
The latest Covid support package is part of Singapore's government budget for the coming financial year starting April.
Overall, the city-state's government is expected to record a deficit of 11 billion Singapore dollars ($8.3 billion) or 2.2% of GDP — an unusual occurrence for the first budget of a new term of government.
Singapore's constitution requires the government's revenue and expenditure to be balanced over a typical five-year term. In the last few electoral cycles, the government accumulated surpluses early in its term — which allowed it to fund bigger budgets later.
The country held general election last July in the middle of the Covid-19 pandemic. So this coming year's budget is the first for the current term of government.
Finance Minister Heng said the government is expected to draw 53.7 billion Singapore dollars ($40.6 billion) from its reserves to fund Covid support measures in 2020 and 2021.
In addition to pandemic support measures, Heng outlined other government spending plans:
- Around 24 billion Singapore dollars ($18.1 billion) over the next three years to help businesses and workers transition to a post-pandemic world.
- About 900 million Singapore dollars ($680.29 million) in household support, including cash handouts and rebates for utilities spending.
- Measures relating to sustainability, including 30 million Singapore dollars ($22.67 million) over the next five years for initiatives to promote greater use of electric vehicles.
The minister also said the government will issue up to 90 billion Singapore dollars ($68 billion) in new bonds to fund major long-term infrastructure projects.