Singapore Fires Up Fiscal Stimulus to Fight Coronavirus
Singapore will spend billions of dollars in the coming months to support companies and industries hurt by the coronavirus outbreak that is likely to pressure its export-reliant economy.
“The outbreak will certainly impact our economy,” the country’s finance minister and deputy prime minister, Heng Swee Keat, told parliament in a budget speech Tuesday.
Mr. Heng said the government’s total expenditure for the fiscal year that begins in April is estimated at 83.6 billion Singapore dollars (US$60.17 billion), the majority of which will be put toward healthcare and anti-outbreak measures.
Among these measures are two special packages worth a combined S$5.6 billion that includes helping fuel cash flows to enterprises and a job support package for local Singaporean workers that will cost the government S$1.3 billion.
Mr. Heng said the government will also grant a corporate income tax rebate for the 2020 fiscal year at 25% of tax payable, capped at S$15,000 for each company. The rebate is likely to cost the government S$400 million.
Sectors directly affect by the virus such as tourism and aviation have also been given tax rebates, besides a 15% property tax reduction for qualifying commercial properties.
Earlier this month, Singapore raised its outbreak alert level to orange from yellow, indicating the virus is severe and transmits easily but hasn’t yet spread widely in the nation. Singapore, an island with a population of about 5.7 million, is a regional business and tourism hub, while its airport is a key transit point for global travel.
As of Monday, Singapore’s total confirmed cases stood at 77, one of the highest tallies outside China, where more than 70,000 people have been sickened. While many of the patients in Singapore are visitors from China, several of the cases were transmitted locally or from sources that haven’t been identified, signaling greater risk of the virus spreading.
“While the MTI’s [Ministry of Trade and Industry] baseline is for GDP growth to come in at 0.5% for the full year, we must be prepared that the economic impact may be worse than we projected,” Mr. Heng said.
The government has decided that it won’t go ahead with its planned two percentage points increase of goods and services tax to 9% from 2021 due to the current uncertainties.
For fiscal 2020, the overall budget deficit is expected to be S$10.9 billion, or 2.1% of GDP, Mr. Heng said, adding that the government has sufficient fiscal surplus to fund the deficit without drawing on its reserves.
Source: Dow Jones