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SINGAPORE: The government expects Singapore’s income position to remain weak for several years due to the impact of COVID-19 on the global and local economy, Deputy Prime Minister Heng Swee Keat said in Parliament on Monday (Oct 5).
At the same time, spending will increase as authorities continue to support residents and businesses, he said.
“This difficult fiscal situation is the result of a global pandemic that no one could have predicted. What is within our control is how well we use our fiscal resources to respond to this crisis and prepare for the future,” Heng said.
Delivering his ministerial statement on Singapore’s response to the COVID-19 crisis, Heng said that close to S $ 100 billion has been set aside for support measures.
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However, he warned that the country must be aware of the way it spends.
“We must be careful not to spend in a way that wastes what generations before us had painstakingly built,” said Heng, who is also finance minister.
“Our guiding principle is prudence, not austerity. We will continue to invest decisively in our national priorities, with a deep commitment to leaving a better future for our children. “
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Mr. Heng noted that the government is enduring a significant part of the adjustment of the entire economy during this crisis, as its income has fallen while making “substantial transfers” to households and businesses.
Revenue collection is expected to fall across all income categories. For example, GST collections are likely to drop 14% compared to estimates made earlier in the year, Heng said.
New measures and extensions to various support initiatives were announced on Monday, and are within the S $ 8 billion expenditure declared in August, the minister said, as the additional spending will be financed by reallocating money from areas where the spending decreased, as development. projects that have been delayed due to COVID-19.
This means that there is no additional withdrawal of the reserves for the latest round of measures, and the total use of the reserves remains within S $ 52 billion.
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According to a statement from the Ministry of Finance, Singapore’s overall budget balance for fiscal year 2020 is forecast to reach a deficit of S $ 74.2 billion.
Operating income is expected to be S $ 63.7 billion, which is S $ 5.1 billion, or 7.4 percent, lower than the revised estimate presented in the May Fortitude Budget, primarily due to to a more moderate economic growth environment derived from COVID-19 and lower economic activity during the “breaker” period, the Finance Ministry said.
And compared to estimates given in the February Unity Budget, operating income will likely be S $ 12.3 billion or 16.1% less than initially calculated.
“We expect our income position to be weak for several years as the effects of COVID-19 on the global economy persist and our economy slows down,” Heng said.
“At the same time, our spending will increase as we continue to support our people and businesses.”
He stressed that much remains to be done to develop Singapore’s economy and society. The country will have to find ways to finance its growth in a sustainable way through higher taxes and “more effective spending,” he said.
“These are difficult choices, but we must face them head-on,” he said.
“We will also maintain a disciplined and judicious use of loans, reserving their use for long-term infrastructure whose benefits are spread over many generations.”
Heng warned that governments in other countries have pledged trillions of dollars in response to COVID-19, and their debt levels have risen to record highs, taking “generations to pay.”
“We have avoided this result, because successive generations have built up strong reserves before this crisis,” he said.
“We must have the discipline to start earning, saving and investing for the future again,” he added. “COVID-19 is not our first crisis, and it certainly will not be our last.”
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