Finance Minister Heng Swee Keat and heir apparent to current Prime Minister Lee Hsien Loong took “a tad longer than usual” with his speech when unveiling Singapore’s Budget 2020 on February 18.
This year is no ordinary year after all for the Lion City.
Just the day before, the government lowered Singapore’s 2020 GDP growth forecast to between -0.5 to 1.5%, versus a rosier 0.5 to 2.5% projected in November last year.
Then there is the Covid-19 outbreak to contend with. Originating from Wuhan, the coronavirus has adversely impacted visitor arrivals and tourism receipts in Singapore, disrupted global supply chains, and dampened economic activity in the city-state.
In fact, Heng opened his speech by warning that Singapore “must be prepared that the economic impact may be worse than we projected”.
As such, the two major themes this year is about helping individuals and businesses cushion the shocks coming in the wake of Covid-19, while also investing and planning for a future of economic uncertainty.
For starters, the government is dedicating S$800 million to supporting efforts in fighting and containing the spread of the virus, the lion’s share of which is expected to be deployed by the Ministry of Health.
The five sectors hardest-hit so far by Covid-19 – tourism, aviation, retail, food services, and point-to-point transportation services – will receive a range of support from the government including property tax rebates and loan programmes to help businesses stay afloat.
Stars of the show were Heng’s two packages totalling S$5.6 billion to help businesses and the average man on the street.
S$4 billion will go towards a Stabilisation and Support Package to help local businesses especially small and medium enterprises deal with the ongoing economic slump. Employers can expect generous wage subsidies to defray existing wage costs and retain employees.
Another S$1.6 billion will be set aside as part of the Budget’s Care and Support Package. Under this package, all Singaporeans aged 21 and above can expect one-off cash payouts of S$100 to S$300 depending on their income.
Additional payouts and grocery vouchers will also be dished out to families with children and elderly parents.
Heng also promises to postpone the 2% hike in Singapore’s Goods and Services Tax (GST) to the year 2025 over concerns about real wages not keeping pace with rising costs of living.
Despite an overall generous package, could the government have dedicated more funds to these stimulus packages? Budget 2020 is expected to run a record-high S$10.9 billion deficit – the highest in 10 years in fact.
Judging from its track record, Singapore has always practiced good fiscal discipline and prudence in saving for rainier days. The government ran total surpluses of nearly S$20 billion from 2016 to 2019.
It might nonetheless be saving the extra gunpowder in case the pandemic worsens.
Rumours are also flying if Budget 2020 is indeed an election-friendly one.
Despite there being no official hint as to when the next general elections might happen, Singapore is due for one very soon. The ruling People’s Action Party (PAP) though might want to wait for the Covid-19 panic and outbreak to subside before calling for one.
Timing is everything.
To have elections happen too soon would be a risky move, if not disingenuous on the part of the government for capitalising on a panic-stricken public. Call for elections too late and voters might forget how efficient and effective the government has been in disaster management.
Singapore is after all rare proof of how one-party dominance in a country can succeed in growing the economy and dealing with black swans.
And if future PM Heng is playing his cards right, PAP can show through Budget 2020 that it is very much in touch with on the ground reality of the average Singaporean.