Singapore Boosts Stimulus by S$8 Billion Amid Recession
Singapore Boosts Stimulus by S$8 Billion as Recession Deepens
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Singapore Deputy Prime Minister Heng Swee Keat announced additional support measures of S$8 billion ($5.8 billion) to cushion the blow from the coronavirus pandemic, extending wage subsidies and aiming to shore up the hard-hit aviation and hospitality sectors.
The new set of measures, announced almost three months after the last package, adds to Singapore’s total pledged pandemic aid of almost S$100 billion, Heng, who is also finance minister, said in a taped speech aired Monday. The measures will be financed in part by unused expenditures from earlier budgets, and won’t require additional funds.
While Singapore has managed to bring virus cases under control, the global economy “remains very weak,” Heng said. “We must continue to adapt to the rapidly changing situation. We designed our measures to give us flexibility for adjustments as the crisis progresses. Some of these measures are ending soon.”
The announcement comes as the city-state has fallen into a technical recession, retail and hospitality sectors are reeling from previous “circuit-breaker” restrictions and officials have warned that further retrenchments loom this year. Data last week showed Singapore’s economy shrank a record 42.9% on an annualized basis in the second quarter from the previous three months, with Trade and Industry Minister Chan Chun Sing warning there could be “recurring waves of infection and disruption.”
| Singapore’s Stimulus Amid Pandemic | ||
|---|---|---|
| Feb. 18 | S$6.4B | Health Ministry funds; targeted aid for sectors like tourism, aviation, food; household cash handouts |
| March 26 | 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% |
| Aug. 17 | S$8B | Extends to March 2021 wage subsidies that would have expired in August 2020; allocates S$187 million in aid to the aviation sector |
The latest measures won’t require any additional use of past reserves beyond what was already approved, Heng said. The government now projects a budget deficit of S$74.2 billion for this fiscal year, S$100 million less than when the fourth package was announced in May.
“Extension and further tiering was anticipated given the weak state of the Singapore economy,” said Selena Ling, head of treasury research and strategy at Oversea-Chinese Banking Corp., of the extension of wage subsidies. “Hopefully, by March 2021, there may be greater clarity that things are turning around, especially if a vaccine has been found and more economic activities have normalized.”
The Singapore dollar was 0.12% stronger on the day at 1.3692 to the U.S. dollar as of 5:53 p.m. in Singapore.
Export figures released Monday showed tentative signs of recovery in July, with non-oil domestic shipments jumping 6% from the same time last year, beating estimates for a second straight month.
Other measures announced Monday include:
- S$1 billion to subsidize firms that increase local worker headcount over the next six months; government will provide wage subsidies of as much as 25% for each new hire younger than 40 years old, and as much as 50% for those 40 or older
- S$320 million in vouchers to residents to boost domestic tourism; MTI will provide details next month
- As much as S$150 million to expand aid for start-up firms, including capital grant and mentorship opportunities
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