Fortitude Budget: Govt committed to rebuilding reserves even though no legal obligation

THE Singapore government is committed to rebuilding the country's reserves, even though there is no legal or constitutional obligation to restore what it has drawn from the past reserves, Deputy Prime Minister and Finance Minister Heng Swee Keat said on Friday.

Some S$52 billion is being drawn from the past reserves to finance four major support packages - the Unity, Resilience, Solidarity and Fortitude Budgets - worth close to S$100 billion, in the country's fight against the Covid-19 pandemic.

Speaking in Parliament to wrap up the Fortitude Budget debate, Mr Heng said using the reserves to fund more than half of the total amount of the four packages is "not a trivial matter", especially when Singapore's yearly budget is about S$80 billion. The total of these four Budgets is more than double the size of the Republic's annual Budgets in preceding years, he said.

"Our reserves are a limited resource, and we must not take them for granted," Mr Heng said. "We owe it to our people - seniors, middle-aged, young and those yet to be born - to be prudent and to ensure good governance, so that they too have the resources to navigate future challenges in an uncertain world."

While the government in 2009 put back the S$4 billion it had drawn from past reserves to fund an economic stimulus package during the Global Financial Crisis, Mr Heng noted that there is no legal or constitutional obligation to do so.

At that time, none of the S$150 billion of reserves that backed the government's guarantee of bank deposits was used, when Singapore's banking system emerged safely from the Global Financial Crisis, he added.

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However, he pointed out that the current crisis is of a significantly larger scale and reach than the Global Financial Crisis, with huge uncertainties looming over the pandemic's economic and social implications.

"What we do know is that there will likely not be a V-shaped recovery, unlike in past crises. And the amount that we are tapping is S$52 billion. So how long would it take to build this back? We cannot be definitive," Mr Heng said.

Rather, what Singapore needs to do now is to focus fully on making the best use of the resources, be prepared to work hard in the years to come and have the resolve to rebuild Singapore's economy, he said.

"In this way, the Singapore economy can emerge stronger, and we will then be in a strong position to build up our resources," he said.