Singapore is allocating a funds of over $ eight billion for the brand new Covid help package deal in 2021
People wearing protective masks walk along the Jubilee Bridge on the Marina Bay waterfront in Singapore on June 7, 2020.
Suhaimi Abdullah | Getty Images
SINGAPORE – The Singapore government on Tuesday announced a new tax package worth $ 11 billion ($ 8.3 billion) to support Covid vaccination efforts and sectors of the economy affected by the pandemic.
Finance Minister Heng Swee Keat outlined how the funds will be used in his annual budget speech:
Approximately $ 4.8 billion Singapore dollars ($ 3.6 billion) is earmarked for public health and safe reopening operations, including vaccination, tracking and testing functions. Expansion of several existing programs to subsidize workers' wages and finance companies in aviation, land transportation and the arts.
The Singapore government pledged more than 90 billion Singapore dollars ($ 68 billion) – around 20% of GDP – last year to help ease the economic blow from the pandemic.
These measures, as well as financial support from the central bank, helped Singapore "avoid a worse recession, prevent job losses and alleviate inequality," Heng said.
Without the measures, the Southeast Asian economy would have shrunk by at least 12.4% last year. That's more than double the 5.4% decline – still the worst economic recession ever – the country saw in 2020.
According to the government's forecast, Singapore's economy is expected to grow by 4 to 6% this year.
The city-state was one of the first countries outside of China to report cases of Covid-19 in early 2020. The country was partially locked down – known locally as a "breaker" – in April last year to help contain the spread of the virus.
The economy has gradually opened up again since June and the number of newly confirmed infections has slowed in recent months. As of Monday, Singapore has reported more than 59,800 cumulative cases of Covid-19 and 29 deaths, data from the Ministry of Health showed.
Government spending plans
The latest Covid support package is part of the Singapore state budget for the coming fiscal year from April.
Overall, the city-state government is expected to run a deficit of $ 11 billion (US $ 8.3 billion), or 2.2% of GDP, an unusual occurrence for the first budget of a new term in office.
The Singapore Constitution requires that government income and expenditure be balanced over a typical period of five years. In recent electoral cycles, the government accumulated surpluses at the beginning of its term that enabled it to fund larger budgets later.
The country held parliamentary elections last July in the middle of the Covid-19 pandemic. So the budget for the coming year is the first for the current government period.
Treasury Secretary Heng said the government is expected to pull $ 53.7 billion ($ 40.6 billion) from its reserves to fund Covid support efforts in 2020 and 2021.
In addition to measures to support the pandemic, Heng outlined other government spending plans:
Approximately $ 24 billion Singapore dollars ($ 18.1 billion) over the next three years to help businesses and workers transition to a post-pandemic world. Approximately $ 900 million Singapore dollars ($ 680.29 million) in household support, including cash spending and discounts on utility expenses related to sustainability, including $ 30 million in Singapore dollars ($ 22.67 million) over the next five years for Initiatives to encourage greater use of electric vehicles.
The minister also said the government would spend up to $ 90 billion (US $ 68 billion) in new bonds to fund large long-term infrastructure projects.