Singapore plans $23.2 billion fourth stimulus package to support coronavirus-hit economy

KEY POINTS

  • Singapore’s government announced another 33 billion Singapore dollars ($23.2 billion) to support its economy which has been severely hit by the coronavirus pandemic. 
  • Earlier, Singapore’s Ministry of Trade and Industry slashed its forecasts for gross domestic product and now expects it to shrink by between 4.0% and 7.0% in 2020 — its third downgrade in economic projections this year. 
  • The country’s health ministry said on Tuesday it has preliminarily confirmed 383 new coronavirus cases, bringing the tally to 32,343 — one of the highest in Asia. 

Singapore’s government on Tuesday announced another 33 billion Singapore dollars ($23.2 billion) to support its economy which has been severely hit by the coronavirus pandemic. 

That’s the fourth stimulus package that the Southeast Asian country has announced since the outbreak. It came after Singapore’s Ministry of Trade and Industry slashed its forecasts for gross domestic productIt now expects GDP to shrink by between 4.0% and 7.0% in 2020 — its third downgrade in economic projections this year. 

Along with the previous three stimulus packages, Singapore will spend nearly 100 billion Singapore dollars ($70.4 billion) to help businesses and households manage the economic impact of the coronavirus. That’s almost 20% of the country’s GDP, said Deputy Prime Minister and Finance Minister Heng Swee Keat. 

“This is a landmark package, and a necessary response to a unprecedented crisis,” Heng said in a speech to parliament.

The latest stimulus measures include: 

  • Enhanced wage support for businesses that cannot resume operations immediately after Singapore’s partial lockdown — or “circuit breaker” — is lifted next month, or those in hard-hit sectors;
  • Waivers and rebates in foreign worker levy for companies in selected industries such as construction, as well as marine and offshore;
  • Rental waivers and relief for small- and medium-sized enterprises;
  • Expanding the number of opportunities in public and private sectors to more than 40,000 jobs.

The additional spending will push Singapore’s budget deficit to 74.3 billion Singapore dollars ($52.3 billion), or around 15.4% of GDP — the largest-ever shortfall for a country known for its prudence.

To fund the stimulus, the government will once again draw down the country’s reserves — a move that Singapore’s President Halimah Yacob, in a Facebook post on Monday, said she has given “in-principle support” for. 

The exact amount of Singapore’s reserves is a state secret, but various estimates have placed it at hundreds of billions in U.S. dollars.

Singapore was one of the earliest countries outside China to report cases of the coronavirus disease, which is formally named Covid-19. The country’s health ministry said on Tuesday it has preliminarily confirmed 383 new coronavirus cases, bringing the tally to 32,343 — one of the highest in Asia. 

Lockdown measures that many countries enacted to contain the spread of the virus have hit economic activity globally, including reducing the amount of trade worldwide. Several economists have named Singapore as one of the most vulnerable economies in the pandemic given its reliance on trade for growth. 

Domestically, the Singapore government imposed restrictions such as temporary closures of schools and most workplaces in early April. Those measures are expected to be gradually lifted starting next month. 

Newsletter Subscription

Sign Up to enjoy top Finance Articles and Insights Delivered to your inbox.
  • Programic Asia Pvt Ltd may keep me informed with eMails about cfoengage.com & finance newsletters. See our Privacy policy for more details