US, Singapore roll out more measures to ease pandemic hit

Singapore

AS the Federal Reserve announced on Monday a second wave of stimulus to support the US economy, Singapore will also see a supplementary Budget being delivered on Thursday afternoon.

This comes as both nations attempt to cushion the economic fallout as a result of the Covid-19 pandemic.

"Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate," said the Fed in a press statement on Monday.

Against such a backdrop, the central bank announced that it will buy bonds "in the amounts needed" to keep borrowing costs low and establish programmes that will provide up to US$300 billion in new financing in order to support the "flow of credit to employers, consumers and businesses".

It will establish two programmes to support credit to large employers, one of which is the Primary Market Corporate Credit Facility that will "allow companies access to credit so that they are better able to maintain business operations and capacity during the period of dislocations related to the pandemic".

The Secondary Market Corporate Credit Facility, on the other hand, will purchase corporate bonds in the secondary market to provide liquidity for outstanding corporate bonds.

Meanwhile, to support the flow of credit to consumers and businesses, the Term Asset-Backed Securities Loan Facility will be set up to enable the issuance of asset-backed securities backed by student loans, auto loans, credit card loans, loans guaranteed by the Small Business Administration and certain other assets.

It is also expanding its Money Market Mutual Fund Liquidity Facility and Commercial Paper Funding Facility to facilitate the flow of credit to aid cash-strapped cities and states.

In addition, the Fed "expects to announce soon" the establishment of a Main Street Business Lending Program to support lending to eligible small-and-medium sized businesses.

Late on Monday, the Ministry of Finance said Deputy Prime Minister and Finance Minister Heng Swee Keat had taken part in the Extraordinary G20 Finance Ministers and Central Bank Governors Virtual Meeting, which discussed the need for a strong and coordinated international response to the pandemic.

DPM Heng said during his intervention that "the stronger the measures to contain the pandemic, the more severe the impact on our economies. We must be prepared to take short-term pains to avoid bigger losses and within each country, we will need to use fiscal tools to preserve jobs, help companies with credit facilities, and support vulnerable households. We can learn from one another."

Mr Heng also called on the G20 to send a strong signal that members are united in tackling Covid-19, to coordinate international fiscal and monetary measures and to help the global economy recover.

In Singapore, workers, businesses and households can expect additional support measures from the government.

These will be announced in a ministerial statement by DPM Heng on Thursday afternoon, said a statement from MOF on Monday.

This comes as "the outbreak has inevitably taken a big toll on our economy, with many jobs and livelihoods at stake," according to Mr Heng, in a Facebook post on Monday evening.

The supplementary budget, which comes just five weeks after Budget 2020 was announced, will be broadcast live on television and radio. The full statement will also be published on the Singapore Budget website after delivery.

"This is the first time that we are introducing a supplementary budget so soon after the main budget, reflecting how fast the situation has deteriorated over the past weeks," said Mr Heng on his Facebook page.

He said these are extraordinary times given that "the world is facing a global pandemic, an economic shock, and a test of the financial systems all rolled into one".

But he reassured people that the government will ensure their safety, preserve jobs and help viable enterprises stay strong.

"Covid-19 is spreading across the globe, and the situation is changing swiftly. No one can foretell the future, but as long as we stay alert and dynamic, we can adapt to the rapidly evolving situation," he added.