Singapore to dip into reserves for second year in Covid-19 fight

The draw of $1.7 billion will be combined with $9.3 billion from last year to fund support, relief measures

For a second year in a row, Singapore will dip into its past savings to pay for measures needed to fight Covid-19, with a draw of $1.7 billion on the reserves.

The amount will be combined with $9.3 billion that was drawn last year but not used, with all $11 billion going towards funding the Covid-19 Resilience Package.

Altogether, the expected draw on the reserves over the two financial years will come up to a total of $53.7 billion.

Announcing this in his Budget statement yesterday, Deputy Prime Minister Heng Swee Keat said running a fiscal deficit to support targeted relief was warranted in the immediate term.

Even as Singapore's economy reopens, there are still badly hit sectors like aviation that are still in the doldrums and segments of society that still need help.

At the same time, public health measures have to continue in the global battle against Covid-19, with success uncertain.

Explaining the decision to fund the Covid-19 Resilience Package through tapping the reserves, Mr Heng noted the measures were extraordinary and temporary.

He added: "This is the second consecutive financial year where we will be drawing on our past reserves. This is necessary, given the exceptional circumstances we are in.

"We are extremely fortunate to be able to tap on our strategic assets and deploy the resources required to deal decisively with Covid-19 and the considerable uncertainties that lie ahead. We should never take our reserves for granted."

He also said President Halimah Yacob has given her in-principle support for the move.

In a Facebook post yesterday, Madam Halimah said Mr Heng had briefed her and the Council of Presidential Advisers last month.

She added she agreed with the Government's proposal given the exceptional circumstances and had approved, in principle, the use of $11 billion from the reserves to fund the short-term relief measures.

Casting his gaze ahead, Mr Heng said the Government's priorities in the medium to long term are to invest strategically for growth and press on with economic transformation, and to lay the groundwork to position Singapore for the future.

He reiterated the need to balance between immediate and long-term needs, making clear Singapore would have to return to running balanced budgets beyond the current crisis.

He noted Singapore's recurrent spending needs had already been going up before Covid-19 hit and the fundamental drivers of these fiscal trends have not changed.

They include an ageing population and maturing society and growing healthcare and social spending.

Stressing the importance of meeting such structural needs in a disciplined and sustainable way, he said: "Our fiscal approach must strike a careful balance between addressing our immediate needs and meeting our longer-term structural needs in a responsible manner."