Some Budget support to be rolled out early; policymakers mull further measures as inflation climbs

SINGAPORE is ready to extend more support to households and businesses if cost pressures worsen - but there is no specific inflation threshold to take action, Finance Minister Lawrence Wong said in Parliament on Monday (Apr 4).

Noting "the concerns that many households and businesses have about the current situation", Wong said he has decided to take immediate action and bring forward the implementation of February's Budget measures where possible.

But, despite MPs' calls for the measures to be enhanced to address rising costs, the minister added in his ministerial statement that "we will need time to allow these measures to take effect and feed through the economy" first.

Lawmakers from both sides of the aisle later pressed for more details in supplementary questions.

Workers' Party MP Gerald Giam (Aljunied GRC) asked about the possibility of more utilities rebates for households, beyond the Budget assurance package that is meant to cushion the impact of an upcoming Goods and Services Tax increase.

"When we sized the assurance package, we already knew that prices were rising. We had anticipated that," Wong replied, reiterating that the government will do more "if the situation worsens".

Singapore's official forecast is for core inflation of 2 per cent to 3 per cent, and all-items inflation of 2.5 per cent to 3.5 per cent in 2022 - a sharp pick-up from the core inflation of 0.9 per cent and all-items inflation of 2.3 per cent seen in 2021.

"After many years of relative price stability, the recent surge of higher inflation has understandably come as a shock to many," said Wong, while observing that inflation in Singapore went as high as 30 per cent in 1974 and 10 per cent in 1980, during global oil crises.

People's Action Party MP Lim Wee Kiak (Sembawang GRC) called inflation "already very high", and asked: "What is the threshold that you are waiting for before more help can be delivered, and what are (sic) the help that the businesses as well as the citizens can expect?"

To that, Wong said he was "not able to give a specific trigger point" and "cannot simply distil it to just one key parameter". But he stressed that the government monitors a range of indicators, such as the impact of inflation on different income groups, and will keep an eye on the impact of the raft of measures yet to be implemented.

Wong also said in his speech that "monetary policy will continue to do its part to ensure medium-term price stability", with the Monetary Authority of Singapore (MAS) set to release its half-yearly policy statement on schedule this month. "The MAS is watching closely the impact of geopolitical and pandemic-related shocks on the Singapore economy and inflation," he noted.

Key Budget measures to be rolled out early include the Small Business Recovery Grant, which will offer S$175 million to companies in sectors hit hard by Covid-19 restrictions. Originally set for release only from June, the grant will now be available by June.

Wong said that the recent easing of domestic Covid-19 restrictions "should also provide some additional revenue support" for local businesses, especially in retail and food and beverage services, while Manpower Minister and Second Minister for Trade and Industry Tan See Leng noted separately that "we will provide more support for affected sectors, if needed".

Households will also get a S$100 tranche of CDC Vouchers by mid-May, which Wong said is earlier than originally planned. The vouchers scheme, which can be spent at heartland enterprises and hawkers, was announced in the Budget, but no timeline for disbursement was given at that time.

And, on top of the faster rollout for these Budget measures, the government will also enhance the ComCare scheme with more Public Transport Vouchers, a minimum 6-month support period for new ComCare Short to Medium-Term Assistance beneficiaries, and an extension for existing recipients.