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Budget gives ‘large’ boost to Singapore economy
SINGAPORE: Singapore’s budget provides a “fairly large fiscal boost” to the economy to counter the impact of the coronavirus, with the government still expecting positive growth for the year, Deputy Prime Minister Heng Swee Keat said.
Authorities are open to “upsides as well as downsides” to its growth outlook, and therefore have to be prepared for the possibility of a recession, Heng, who is also finance minister, told Bloomberg Television’s Haslinda Amin.
“Our central scenario is still that we will have some positive growth this year,” he said. “It all depends on what happens to the global economy in the coming months and that, in turn, depends on how far the virus outbreak spreads and how severe it is.”
Singapore, which has more than 80 cases of the coronavirus, this week lowered its growth outlook for the year to a range of -0.5% to 1.5% as it braces for a hit to tourism and trade.
In a budget late Tuesday, Heng announced plans to widen the fiscal deficit to the most since at least 1997 with S$6.4bil in dedicated support to shore up the economy. He said in yesterday’s interview that the growth revision didn’t take into account the potential boost to the economy through the budget measures announced a day later.
Heng said monetary and fiscal policies are working together to bolster the economy. The Monetary Authority of Singapore, which uses the exchange rate as its main policy tool, said on Feb 5 there was room within its exchange-rate band to accommodate some weakness in the currency to counter the coronavirus outbreak. The central bank’s next scheduled policy decision is in April.
Singapore’s budget includes S$800mil in dedicated funding to mitigate the virus impact, as well as a S$5.6bil package to stabilise the economy via support to businesses and households.
“The government has been very prudent in the first few years of our term and I have enough firepower to deal with this for now,” Heng said.
He added that China is taking decisive steps to manage the virus outbreak and the stimulus measures it’s taken to support the economy are “positive.”
Heng also made the following comments in the interview:
Fiscal prudence
“It is because of our fiscal prudence that we have this large reserves that we could use in this current term of government. And at the same time, we also have our past reserves if we ever had to call on it, but in which case we would need the approval of the president. But for now, the government has been very prudent in the first few years of our term and I have enough firepower to deal with this for now.”
Property market
On whether there are plans to remove the additional buyer’s stamp duty: “No, it is not on our radar at this point because I think, as I said, we need to make sure we stabilise the economy and we address long-term structural issues.”
Innovation
“Long-term structural issues will be first, technology and innovation. This is going to power growth in the next phase. Not just for Singapore but for the global economy. And we want to make sure that we are in that. Very importantly, I would like Singapore to be a global Asian node of technology innovation and enterprise.” — Bloomberg