Planners closely watching fiscal, monetary policy as Singapore enters worst recession

THE Singapore government will soon unveil plans to help the ailing economy, including an update from Deputy Prime Minister Heng Swee Keat on fiscal support measures.

That's even as Singapore's central bank said it stands by its monetary policy stance, which was eased in a double-tap move at its last half-yearly review in April.

"In the coming weeks, we will progressively speak and share with you the plans for the respective sectors," Minister for Trade and Industry Chan Chun Sing said during a briefing on Tuesday.

In reply to a press question on whether Singapore could see another round of large-scale measures - after a record four Budgets in the first half of the year - Mr Chan said that he would leave the matter to comments by Mr Heng "in due course".

Elaborating on local workers' wage subsidies, which have been a key weapon in the bailout arsenal, Minister for Manpower Josephine Teo also revealed that the government is now examining "whether broad-based support continues to be needed".

"We are very mindful that, in order to be able to focus our resources on helping the workers who are newly displaced, it's best if there is still a strong base of our workforce that remains in employment," she said. "So that's something that is actively being looked into."

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Mrs Teo added that Mr Heng, who is also the Finance Minister, "will address this question, I think quite soon, so we will wait for that to take place".

Meanwhile, Monetary Authority of Singapore (MAS) deputy managing director of economic policy Edward Robinson maintained that the central bank's currency rate-based policy "remains appropriate including in forestalling a broadening or deepening of disinflation pressures".

The Singapore dollar nominal effective exchange rate (S$NEER) has fluctuated close to the mid-point of its policy band since April, said Mr Robinson, who is also the MAS's chief economist.

He noted that a recent stress test of the corporate sector, carried out by MAS, found "some degree of resilience" that reflects available buffers in the financial system.

Still, he warned that revenue constrictions from an economic downturn could put pressure on corporate debt "globally, regionally and in specific segments within the domestic economy".

"Certain specific segments are a bit more stretched than normal, so this is something that central banks and regulators are keeping watchful vigilance over," Mr Robinson told the press.

OCBC Bank chief economist Selena Ling later remarked that "market reactions and policy implications are muted at this juncture", with little movement in the S$NEER.

"MAS may continue with their wait-and-see neutral stance for now until the October review," she added in a morning note.

But Brian Tan, an economist at Barclays Bank, called attention to the "rising risk of further easing" by MAS at its next meeting in October.

"MTI's acknowledgment that the outlook for external demand - where FX (foreign exchange) policy is more relevant - has weakened further appears to provide some support for another modest downward re-centring of the FX policy band in October," he said.