S$1.2b in extra Covid-19 support partly funded by reallocation under SINGA
Finance Minister says there's no need to draw on past reserves to fund measures for Phase 2 and 3 Heightened Alert.
Additional Covid-19 support measures for Singapore's "Heightened Alert" period are expected to cost S$1.2 billion.
This will be financed by a reallocation of monies previously budgeted for, Finance Minister Lawrence Wong said in Parliament on Monday as he introduced a Supplementary Supply Bill for this.
Half of the amount - S$600 million - will come from capitalisation of development expenditure under the recently-passed Significant Infrastructure Government Loan Act (SINGA), and the rest from underutilisation of development expenditure.
The ministerial statement he delivered will be debated in Parliament on July 26.
When the support measures were announced in May for Phase 2 (Heightened Alert), which was meant to last four weeks, the estimated cost was S$800 million.
Support was subsequently extended alongside the extension of Phase 2 (Heightened Alert) and the later move to Phase 3 (Heightened Alert).
The measures include enhanced Jobs Support Scheme support for affected sectors, rental relief, subsidies and the Covid-19 Recovery Grant (Temporary) for individuals.
"We sized the package based on what we assessed to be appropriate to meet the needs of businesses and individuals during this period," said Mr Wong, noting that most parts of the economy continued to operate in the last two months.
This was unlike the two-month "circuit breaker" in 2020, when most activities were curtailed.
The package also builds on existing support measures, such as the Jobs Growth Incentive, he added.
"Under these circumstances, I do not believe there is a need to draw on our past reserves," he said.
While the government "will not hesitate to use the full measure of our fiscal firepower to protect the lives and livelihoods of Singaporeans", it must also be careful about the state of its public finances, he said.
Half of the S$1.2 billion will come from development expenditure that was set aside in Budget 2021, but has since been freed up. This is from two major infrastructure projects: the deep tunnel sewerage system, and the North-South Corridor.
These projects meet the criteria for financing under SINGA, which allows for major and nationally-significant infrastructure projects - those costing at least S$4 billion - to be funded by government borrowing.
With SINGA having been passed by the House in May, the development expenditure meant for these two projects will be capitalised from the fourth quarter of 2021.
"The amount that was originally budgeted to finance these two projects can be reallocated to fund this support package," said Mr Wong, adding that such a move will not be possible in future budgets.
"The amounts that will be capitalised under SINGA will be incorporated as part of future annual Budget Estimates, and so we will not have such reallocation space in future," he said.
The remaining S$600 million will be reallocated from underutilised development expenditure, mainly due to construction delays as a result of the pandemic.
"We expect to catch up on our development schedules as the situation stabilises. So, the delayed expenditure will still need to be incurred in future financial years," said Mr Wong.
The global economic outlook remains highly uncertain, depending on the pandemic's path, he said. Barring unforeseen circumstances, the government expects GDP growth of at least 4 to 6 per cent this year, but with uneven recovery across sectors.
Outward-oriented sectors - accounting for about 70 per cent of the economy - are expected to benefit from the pickup in external demand, and domestic consumer-facing sectors can also expect to recover as restrictions ease, said the minister.
"But the recovery will be more gradual in some of the hard-hit sectors such as the aviation and tourism-related industries."
As it will take longer for international air travel volumes to return to pre-Covid levels, "there might be some consolidation in these industries", he said.
"We will re-skill the affected workers and help them transition to other growing sectors that need manpower," he added.
The government will also continue to provide targeted support for these industries, "to preserve their core capabilities and position them for recovery, which will come when travel restrictions are eventually lifted".
Border reopening is an existential issue for Singapore, said Mr Wong, noting that there has been feedback from the business and investment community that Singapore "might lose out to other hubs" that are moving more aggressively to re-open their borders".
The government understands the concerns, but is mindful that premature reopening could cause another wave of cases, he said.
The priority is thus to speed up vaccination, with high vaccination coverage then allowing Singapore to progressively reopen and reconnect with the world.
For now, the reality facing Singapore is that Covid-19 is unlikely to go away anytime soon, said Mr Wong, who is also one of three co-chairs of the multi-ministry taskforce on Covid-19.
"But with vaccination and improvements in treatment, we can make SARS-CoV-2 look more like influenza in terms of morbidity and mortality," he said.
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