The Government may need to seek President Halimah Yacob’s consideration for “a further draw” on the nation’s past reserves in the event that the COVID-19 pandemic situation worsens, said Deputy Prime Minister Heng Swee Keat on Wednesday (24 Feb).
In his Budget 2021 speech last week, Mr Heng, who is also Finance Minister, said that the Government will draw up to S$11 billion from the nation’s reserves in the current budget, on top of drawing S$42.7 billion in the previous budget. This brings the total amount to S$53.7 billion.
In a Facebook post yesterday, he noted that drawing on past reserves for the second year in a row was a “difficult decision”, considering the “discipline of balancing budgets” is important for the country’s financial resilience.
“In my Budget Statement, I explained that if economic recovery progresses on track, we expect to fund the expenditures for the remainder of this term of Government without having to further draw on Reserves.
“But the global outlook is highly uncertain, and we must be prepared for a scenario where recovery is bumpier and takes much longer,” said Mr Heng.
He explained that if the economic and fiscal situation turns out to be “worse than expected”, the government has to “stay the course” to invest for the longer term to enable Singapore emerges stronger amid the unprecedented crisis.
“If the situation worsens, we may need to approach the President for a further draw on Past Reserves to continue funding investments that will enable Singapore to emerge stronger in the midst of this unprecedented crisis.
“We should then think hard about how we can ensure that if we need to draw on Past Reserves for this purpose, we can, over time, build this back,” Mr Heng asserted.
The issue is not unique to Singapore, he said, pointing to how some countries have legislatively binding debt ceilings, with Germany hotly debating further suspension of a “debt brake”.
“We have benefited during this crisis from the prudence and long-term orientation of previous generations. We owe it to future generations to exercise this prudence and ensure they can deal with future crises,” said the Minister.
Mr Heng said he would give more details at his Budget round-up speech on Friday.