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Resilience Budget: Singapore's overall budget deficit almost quadruples to S$39.2b

SINGAPORE'S overall budget deficit for financial year 2020 will be raised to a record S$39.2 billion, nearly four times the amount estimated slightly more than a month ago, due to a substantial support package rolled out to rescue the coronavirus-battered economy.

"We are able to support this unprecedented deficit and still remain fiscally sustainable because we have been disciplined in the use of past reserves, tapping on it only in exceptional circumstances like these," Deputy Prime Minister and Finance Minister Heng Swee Keat said in Parliament on Thursday, as he delivered a Resilience Budget to the tune of over S$48 billion.

To fund the supportĀ package, Singapore President Halimah Yacob, custodian of the government's past reserves, earlier gave in-principle support for the use of S$17 billion of past reserves.

During Budget 2020 in February, Mr Heng said the the government was expecting a budget deficit of S$10.9 billion for FY2020, after he announced details of a S$4 billion Stabilisation and Support Package.

Since then however, the pandemic appears to have worsened, with the new epicentre now shifted to Europe.

Mr Heng said the situation remains highly fluid and uncertain "with significant risks", adding that Singapore's fiscal position will be affected from both the revenue and expenditure sides.

This is because Singapore's revenues will be affected with a weak economic outlook, while its expenditure will go up to enable the country to respond effectively to the crisis.

While Singapore has benefited from unexpected revenue upsides, such as exceptional Statutory Board Contributions from the central bank and increased stamp duty collections, Mr Heng said the country cannot hope to rely on a repeat of this.

"Instead, we must be prepared to bear down the downsides when they happen. Because we have been prudent and did not decide to spend all of the surplus that we colelcted, we are ready to meet such downsides," he said.

He added that significant volatility in the economy and financial markets can be expected in the near future, and Singapore must stay nimble in this fluid situation.

This is so that resources can be channeled quickly to the most urgent and important needs of Singaporeans, he said.

"I hope that those who receive support will use the resources wisely and responsibly, or channel it to those who may need it more," Mr Heng said, adding that significant help is now given in a broad-based manner because of the urgency of the situation.

"At the same time, we will not hesitate to take action against any abuse," he said.