On Monday (6 April), Deputy Prime Minister and Finance Minister Heng Swee Keat announced in Parliament a follow-up budget from the previous Resilience Budget. The new budget, called the Solidarity Budget, allocates S$5.1 billion to help households and businesses to stand against the COVID-19 pandemic for a circuit-breaker period of four week.
The measures proposed are (1) S$600 cash payout for all adult Singaporeans, (2) higher rental waivers, (3) waiving foreign workers levies in April, (4) enhanced eligibility for self-employed income relief, and (5) increased wage offsets in April.
The Solidarity Budget will cost S$1.1 billion for the Solidarity Payment cash payouts while another S$4 billion will help support workers and businesses. President Halimah Yacob has given in-principle support to the proposed idea of drawing S$4 billion from past reserves to finance the budget.
This new Solidarity Budget was introduced 11 days following the previous budget introduced on 26 March called the Resilience Budget. With half the world under lockdown and over a million individuals infected, Mr Heng stated that the global pandemic “has exploded”.
The country has gradually increased its measures, with the latest circuit breaker measures slated to start from Tuesday (7 April). Besides essential services and other exceptions, most workplaces have been ordered to close.
Mr Heng stressed that “the circuit breaker is essential, but we are acutely aware that it will be painful. It will disrupt businesses and impact workers severely.” Demand in Singapore’s exports will fall due to the restrictions in the country’s trading partners and this will mean slower growth in gross domestic product (GDP).
“But we must take these hard decisions, make the difficult adjustments, and do all that we can in the next few months, to protect the lives of our people… otherwise, if the outbreak escalates, the impact on lives and livelihood will be even worse,” Mr Heng pointed out.
Budget 2020 in February introduced the Jobs Support Scheme which is enhanced for one month under the Solidarity Budget. This means that 75 per cent of gross monthly wages will be offset for the first S$4,600 of wages received by each local worker in April. The first payout will be earlier in April compared to previously in May.
To relieve cash flow pressures and reduce business costs, foreign worker levies due in April will be waived. Mr Heng said that this is to “help them preserve their business structure and quickly resume operations, we will also provide employers with a foreign worker levy rebate of S$750 for each work permit or S Pass holder, based on previous levies paid in 2020″.
With the eligibility changes, the number of those automatically eligible for the Self-Employed Person Income Relief Scheme will be approximately 100,000 self-employed persons, compared to 88,000 before.
Under the loan initiatives such as the Temporary Bridging Loan Programme, the Enterprise Financing Scheme – SME Working Capital Loan, and the Enterprise Financing Scheme – Trade Loan, the government’s risk share of loans will increase from 80 per cent to 90 per cent for loans given from 8 April 2020 until 31 March 2021.
Furthermore, a one-off S$600 Solidarity Payment in cash will be given to all Singaporean adults. An extra S$300 has been added to the S$300 already introduced in the Care and Support payout.
Earlier, in-principle support had been given by President Halimah for the state to partly finance the Resilience Budget by drawing S$17 billion from past reserves.
To finance the Solidarity Budget, President Halimah has also given her in-principle support to the government’s proposal of drawing an additional S$4 billion from past reserves. Also, the current government will use its fiscal space to finance the remaining S$1.1 billion.
The total spending value of the three budgets introduced so far this year is now S$59.9 billion or at around 12 per cent of gross domestic product (GDP). This also means that the overall budget deficit for FY2020 will increase to 8.9 per cent of GDP or S$44.3 billion .
“We have the plans, and the financial resources to carry out these plans without burdening future generations with the bill… we are grateful to our founding generation for their foresight and discipline. The key now is how we can pull together, in solidarity, as a nation to implement these plans, and make adjustments as the situation continues to evolve,” Mr Heng concluded.