Budget 2022: S$6b to be drawn from past reserves for Covid-19 relief

THE Singapore government has proposed to fund Covid-19 public health expenditure through a S$6 billion draw on past reserves in FY2022. President Halimah Yacob has given her in-principle support for the move.

This would bring the total expected draw on past reserves over FY2020 to FY2022 to up to S$42.9 billion.

The cumulative draw is less than the initial draw of S$52 billion the President originally agreed to for FY2020 at the onset of Covid-19, Finance Minister Lawrence Wong said in Parliament.

For FY2020, the government now expects to use a lower amount of S$31.9 billion from past reserves. Wong attributed this to the swift and decisive response that helped avert a deeper impact on public health.

The economy and businesses also exhibited a stronger-than-expected rebound, averting the need for measures such as loan loss provisions.

For FY2021, the government expects to draw S$5 billion from past reserves instead of the planned S$11 billion initially.

This is mainly due to a reduced expenditure of S$10 billion for the Covid-19 Resilience Package, underutilisation of ministries' expenditures after projects were delayed by the pandemic, and one-off revenue upsides including from vehicle quota premiums and stamp duties.

Wong noted that beyond the pandemic crisis, Singapore's spending needs continue to grow. The country is tackling structural shifts and will need to invest more to address longer-term priorities.

"In order to meet new spending needs, besides raising revenue we will continue to manage our expenditure growth," he said.

From FY2023, a further 1 per cent cut will be applied to the budgets of ministries and organs of state. Funds from this adjustment will be chanelled to new priorities.

Since FY2017, a 2 per cent cut has been implemented in the budgets of all ministries and organs of state.

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