Singapore will set aside a further S$11 billion ($8.31 billion)in a Covid-19 support package this year, its finance minister Heng Swee Keat said on Tuesday, extending last year’s unprecedented fiscal response to the pandemic.
The government had last year committed nearly S$100 billion ($75.55 billion) in support measures to cushion the impact of the coronavirus outbreak over five budgets.
“My new year’s wish is to have one budget,” Heng said at the start of his budget speech, as he announced more spending for the hardest hit sectors such as aviation and tourism.
He also unveiled multi-billion dollar schemes to transform the economy and issue debt to fund large infrastructure projects, while raising petrol duties and reaffirming plans to hike its sales taxes in coming years.
The overall budget deficit for financial year 2020 reached S$64.9 billion, or 13.9% of the gross domestic product, the largest since the city-state’s independence. It projects an overall deficit of S$11 billion for 2021.
Singapore’s small and open economy is expected to expand 4% to 6% this year, bouncing back from a 5.4% contraction in 2020, with the city-state having largely brought the outbreak under control and rolling out its vaccination programme.
“The rationalization of broad based support schemes to be more targeted for the hardest-hit sectors is be expected in a recovery,” said Selena Ling, head of treasury research and strategy at OCBC Bank.
The government plans to allocate S$24 billion over the next three years for economic transformation measures such as redesigning jobs and help businesses innovate as the city-state prepares itself for a post-pandemic world.
“We will invest in our people – so they can bounce back and be ready for opportunities that arise; we will invest in our businesses – so they can innovate, build deep capacities and seize growth opportunities,” Heng said.
He said Singapore was also investing in a range of innovative schemes including a software system that can verify Covid-19 test result certificates and vaccination records, an endeavour to help to revive air travel.
The island-state has been trying to come up with strategies to fight the impact of climate change, including by encouraging electric vehicles.
“Unlike Covid-19, which was a sudden and sharp shock, climate change is a gradual and intensifying risk, year by year,” Heng said.
As part of those efforts, the country plans to issue green bonds for some infrastructure projects — a move that will also help the country deepen the market liquidity for such instruments and enhance Singapore’s status as a green finance hub, he added.
He also announced a plan to issue debt to fund other long term infrastructure projects with a cap of S$90 billion over the next 15 years.