Singapore's financial position to be 'a lot weaker' in coming years, says DPM Heng

WITH almost S$100 billion set aside to combat Covid-19, Singapore's financial position will be "a lot weaker" in the coming years, and the government would need to find ways to manage this "difficult financial situation", said Deputy Prime Minister Heng Swee Keat in an interview with Channel NewsAsia on Wednesday.

Mr Heng, who is also finance minister, made it clear that his immediate priority was "to keep our people safe. And second, let's get the economy going again, as much as possible. It will not be easy. But if we put our minds to it, we can emerge stronger. And with that, I think we can begin to rebuild our resources over time".

The interview followed Tuesday's unveiling of an unprecedented slew of support measures costing S$33 billion. Packaged as the "Fortitude Budget" - Singapore's fourth Budget in less than four months - the support measures are primarily targeted at helping workers and businesses tide over the crisis.

Together with the three other Budgets, total government support now totals S$92.9 billion, about a fifth of Singapore's gross domestic product. Singapore faces an overall budget deficit of S$74.3 billion - its largest since independence; the total draw on past reserves this year now stands at S$52 billion.

Asked during the interview if there was a timeline to return the S$52 billion to the reserves - with reference to the fact that the government withdrew S$4 billion during the 2009 financial crisis and returned the sum in 2011 - Mr Heng replied that S$4 billion was "a fraction" of the S$52 billion that Singapore is drawing this time.

He added that back then, the Singapore economy rebounded strongly the following year, once the concerns about the fragility of the banking system were addressed globally.

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He did not say whether the sum of S$52 billion will be returned eventually, or when that would happen. But he pointed out that it was a "very significant" move to draw on past reserves this time - a far larger sum, and with "extremely high" uncertainty ahead.

"I do not expect the global economy to recover quickly. Neither do I expect the Singapore economy to recover quickly. But our aim must be that we hope to recover faster and we aim to do our best to bring it as far as we can."

During the interview, he reiterated several times that Singapore has to use the sum taken from past reserves "wisely" and to "use it well".

He will address the issue of what the government will do to ensure that Singapore has fiscal power to keep it safe for the long-term at a later date.