Singapore Focuses on Jobs in New S$33 Billion Virus Relief
Singapore delivered a fourth fiscal package of S$33 billion to counter the economic fallout of the coronavirus.
(Bloomberg) -- Singapore’s Finance Minister Heng Swee Keat delivered a fourth fiscal package of S$33 billion ($23 billion) to counter the economic fallout of the coronavirus, providing specific support to saving jobs.
The latest measures will help businesses and workers affected by border closures and movement restrictions, Heng said in a Parliament session Tuesday. The steps will push this fiscal year’s budget deficit to 15.4% of gross domestic product, the largest gap in the country’s history.
“The central focus of this budget is jobs,” Heng said. “Large parts of the last three budgets were directed at protecting the livelihoods of our workers. In this budget, we will do even more.”
The new package takes Singapore’s total support to S$92.9 billion, or 19.2% of gross domestic product, Heng said. The government is trying to cushion an economy potentially headed for its worst contraction since Singapore’s independence and will tap another S$31 billion in past reserves, bringing the total drawn from reserves this financial year to S$52 billion.
| Singapore’s Stimulus Packages | ||
|---|---|---|
| Feb. 18 | S$6.4B | Health Ministry funds; targeted aid for sectors like tourism, aviation, food; household cash handouts |
| March 26 | S$48B | Scrapping of property tax for hard-hit sectors; wage support for businesses; freezing of government fees; fiscal 2020 deficit estimated 7.9% of GDP |
| April 6 | S$5.1B | Extends wage subsidies and foreign-worker levy waiver; raises cash handouts; raises fiscal 2020 deficit estimate to 8.9% of GDP. On April 21 the 75% wage subsidy was extended to all businesses, foreign worker levy was waived for May and S$750 employer rebate per worker was announced |
| May 26 | S$33B | Extends foreign-worker levy waiver and rebate for two months; extends wage subsidy until August for some firms; raises wage support for severely hit sectors to 50% or 75% |
“The numbers really jump out at you,” as stimulus spending near 20% of GDP “puts us in the league of Germany and Japan,” said Selena Ling, head of treasury research and strategy at Oversea-Chinese Banking Corp. She said the measures struck a good balance between supporting individuals and industries suffering now, and preparing for a post-Covid world “where digital transformation and more disruptions will be the norm.”
The local dollar, which rose earlier in the day on first-quarter GDP data that wasn’t as bad as feared, was up 0.40% at 1.4191 per U.S. dollar as of 5:45 p.m. The benchmark stock index maintained gains after the announcement of the new virus relief, up 1.3%.
Phased Opening
Singapore is starting to reopen its economy in three phases. Most businesses are expected to re-open by July, though sectors such as aviation and tourism could take longer, Heng said Tuesday.
Measures in the fourth stimulus package include:
- Extension of foreign-worker levy waiver and rebate, for two months, for businesses employing migrant workers that had to suspend operations
- Cash grant, totaling about S$2 billion, to offset rental costs for small- and medium-sized enterprises
- S$500 million to help businesses in their digital transformations, including helping stall owners at hawker centers and wet markets to adopt e-payments systems
- Pledge to create 15,000 public-sector jobs, and cooperate with private sector to create 25,000 openings
- Expands a traineeship program for local first-time job seekers
- Targeted support for mid-career job seekers aged 40 and above, including coverage of 40% of eligible workers’ salaries over six months, to a maximum of S$12,000
- Sets aside an additional S$13 billion in contingency funds for rapid response to virus-related developments
Singapore was among the first governments in the region to unveil stimulus measures in February to counter losses from the pandemic, with the bulk coming in March via a S$48 billion package that included wage subsidies and cash handouts. Officials have expanded support since then as economic losses mount amid global restrictions on trade and travel.
Data earlier Tuesday showed the stimulus has been unable to thwart a severe downturn in the trade-reliant economy, with gross domestic product expected to contract 4%-7% this year, far more than previously expected. While recent monthly data like exports and manufacturing showed a surprise gain in April, that was mostly due to a jump in pharmaceuticals from a low base a year earlier.
President Halimah Yacob has already given in-principle support for the government to tap past reserves to help finance the latest stimulus package.
Heng addressed the risk of a second wave of virus cases as the economy reopens.
Singaporeans must “be psychologically prepared for setbacks, before we safely transition to a new normal and build a Covid-safe nation,” he said. “The global economy is unlikely to recover quickly. We must be prepared for tough times in the months ahead.”
©2020 Bloomberg L.P.