SINGAPORE - The Government will dip into Singapore's reserves up to the tune of $17 billion to save jobs and the economy amid the growing crisis sparked by the coronavirus pandemic.
It will be the biggest draw on the country's reserves, which has been used only one other time, and President Halimah Yacob has given in-principle approval for it, said Deputy Prime Minister Heng Swee Keat in Parliament on Thursday (March 26).
He added that he is prepared to propose further draws on the savings of past governments, should the situation worsen and warrant it.
"The Covid-19 pandemic, and the multiple threats it poses to our nations, is the sort of event that we had accumulated reserves for," said Mr Heng, who is also Finance Minister.
"We have saved up for a rainy day. The Covid-19 pandemic is already a mighty storm and it is still growing."
The $17 billion will fund part of the $48 billion Supplementary Budget, unveiled in the special Parliament sitting on Thursday, to help Singapore weather the unprecedented financial and healthcare crisis as the virus batters economies around the world.
Most of it, about $13.75 billion, will be used to pay for measures to give greater job support, while the rest will help those who are self-employed, the aviation sector, as well as to provide financing to companies.
The stimulus measures announced on Thursday will raise Singapore's overall budget deficit this financial year to $39.2 billion.
It is an unprecedented deficit that comes up to 7.9 per cent of gross domestic product, said Mr Heng, but Singapore can still remain fiscally sustainable, because of the discipline and prudence in husbanding the reserves accumulated over many years.
Singapore's leaders have reminded the country time and again of the importance of the strategic asset, and Mr Heng reiterated this as he noted that the reserves serve as a bulwark against shocks and crisis of an extraordinary nature, of which the current pandemic more than qualifies.
Having saved for a rainy day, and created a rigorous framework to ensure the money is protected from misuse, the Government now has the wherewithal to respond decisively, he added.
He noted the Government had resisted political pressure and ignored many calls in the past to dip into the piggy bank, and scrupulously upheld the principle to use it only in exceptional situations.
Until now, it has drawn on the reserves only once, when it was given approval to draw down $4.9 billion but used only $4 billion to fund schemes to save jobs hit by the global financial crisis in 2009.
The money was returned to the reserves in 2011 after the economy turned around.
In 2008, a sum of $150 billion was also pledged to guarantee bank deposits in Singapore up to 2010. It marked the first time the Government called on the President to exercise the Head of State's custodial powers over the country's reserves, but the guarantee was never triggered.
"If over the years, we had frittered the reserves away, on more immediate but less existential needs, big and small, as some in this House have pressed the Government to do, we would be in a much weaker position today," said Mr Heng.
He added: "This is not a normal business cycle that we would have anticipated and dealt with using the revenues collected by each term of government. It is a "black swan" event that comes only once every few decades."
He warned that Singapore's fiscal position will be affected from both the revenue and expenditure sides.
To battle the crisis, the Government will spend more money, and yet, economic activities have halted with countries shutting down to stop the spread of Covid-19, affecting the Government's revenue, he said.
Already, the Ministry of Trade and Industry has forecast a sharp contraction this year, downgrading the economy's growth forecast to a range of -4.0 to -1.0 per cent, from an earlier estimate of -0.5 per cent to 1.5 per cent.
Said Mr Heng: "In the past few years, we benefited from unexpected revenue upsides... We cannot hope to rely on a repeat of this. Instead, we must be prepared to bear the downsides when they happen.
"Because we have been prudent and did not decide to spend all of the surplus that we collected, we are ready to meet such downsides."
Noting that the situation remains highly fluid and uncertain, he urged those who receive help to use the resources wisely.
"The Covid-19 situation is fluid and fast-moving, and nobody is quite sure how it will develop. But because we have prepared ourselves well, Singapore has the resources to meet this crisis with confidence. We will use our resources to get through this together," said the Deputy Prime Minister.