No plans to draw on reserves for new Covid-19 support measures: DPM Heng

SINGAPORE – There are no plans for the extra $8 billion pumped into Singapore’s fight against the coronavirus pandemic to be funded by a further draw on national reserves.

Instead, the money will be reallocated from other areas, including development expenditure delayed due to Covid-19, Deputy Prime Minister Heng Swee Keat said in a ministerial statement on Monday (Aug 17).

The Ministry of Finance said in an annex to the statement that the country’s development expenditure is estimated to see a reduction of $6.9 billion due to delays in major construction projects arising from the circuit breaker, as well as the need to ensure a safe reopening of the construction sector afterwards.

Singapore’s operating expenditure is also estimated to see a reduction of $1.5 billion, mainly due to lower military expenditure arising from pandemic-related delays in projects, as well as the cancellation or deferment of exercises. The lower operating expenditure was also attributed to lower manpower costs, as civil servants did not get the usual mid-year bonus this year.

In his statement, Mr Heng laid out the expanded measures to save jobs, create new ones and help Singapore seize new opportunities for growth in a post-coronavirus world.

“I have briefed the President and the Council of Presidential Advisers on the latest situation and the need for these measures,” he said. “I thank them for their earlier support and approval for the use of Past Reserves to respond to the crisis, which has put us on a strong footing to manage the evolving situation.”

On Monday, the Finance Ministry (MOF) also provided an interim update on Singapore’s current Budget estimates for this financial year in view of the unprecedented impact of Covid-19 on the Government’s budgetary plans and forecasts.

These account for lower revenue projections in view of the weaker economic outlook, as well as savings from the under-utilisation of expenditure voted in previous budgets, arising mainly from disruptions brought about by Covid-19.

They also take into consideration the additional support measures announced by Mr Heng on Monday.

Singapore expects an overall Budget deficit of $74.2 billion this financial year, a fraction lower than the $74.3 billion deficit project in May.

Its operating revenue is projected to be $63.7 billion, which is $5.1 billion or 7.4 per cent lower than the revised estimate presented at the Fortitude Budget in May.

This decrease was attributed to the subdued economic growth environment due to the Covid-19 pandemic, as well as lower economic activity during the circuit breaker period.

This led to lower-than-expected revenues of $4.1 billion, primarily from goods and services tax, betting taxes and stamp duty, MOF said.

It was also reduced by an estimated $0.9 billion of additional foreign worker levy waivers, which were announced at the beginning of August.

Singapore’s total expenditure this year is projected to be $102.1 billion, which is $8.4 billion or 7.6 per cent lower than the revised estimate presented in May.

Its operating expenditure is expected to be $85.4 billion, which is $1.5 billion or 1.7 per cent lower than what was previously announced.

“The decreases are partially offset by additional expenditure for further Covid-19 support measures such as sector-specific support and measures to bolster social resilience and public health,” the ministry added.

Meanwhile, the country’s development expenditure is estimated to be $16.7 billion, or 29. 2 per cent lower than what was previously announced.

In addition, special transfers are estimated to be $54.5 billion. This is $3.2 billion, or 6.3 per cent, higher than earlier revised estimates. The increase is mainly due to the extension of the Jobs Support Scheme to cover wages up to March next year.

The Net Investment Returns Contribution is expected to be $18.6 billion.

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