Singapore increased its cash payout to individuals and announced additional steps to save jobs as the city-state prepares to severely curtail activities to contain a spike in coronavirus cases.
The third virus-related stimulus package in two months will cost S$5.1 billion ($3.6 billion), taking the nation’s total virus relief to almost S$60 billion, or 12% of gross domestic product, Deputy Prime Minister Heng Swee Keat said Monday in Parliament. The government will seek to draw an extra S$4 billion from past reserves, and will push up its budget deficit in the current fiscal year to 8.9% of GDP, he said.
Trade-reliant Singapore is reeling from the impact of the coronavirus outbreak, with the government predicting a 1%-4% contraction in the economy this year. That’s even before new restrictions on movement begin Tuesday, including the closing of schools and non-essential businesses.
“The primary aim of this solidarity budget is to take further steps to save jobs and protect the livelihoods of our people during this temporary period of heightened measures,” Heng said.
Singapore’s equity benchmark, the Straits Times Index, extended gains to as much as 3.7% after Heng announced the new stimulus package. The gauge was up 2.9% as of 3:30 p.m.
The government already had requested to tap S$17 billion in past reserves for its second stimulus package. President Halimah Yacob, in a Facebook post, said she gave her in-principle support to use the additional reserves.
Some of the new measures announced Monday:
*. An additional S$300 in cash handouts for all adult Singaporeans, bringing the total per person to S$600
*. Wage subsidy for each local employee increased to 75% of gross monthly wages, for the first $4,600 of salary paid this month
*. Foreign-worker levy waived for April
An accelerating virus caseload in recent weeks -- now increasingly made up of local clusters rather than Singaporeans returning from overseas -- culminated in the country’s largest one-day total of confirmed cases Sunday, at 120.
The fresh stimulus was announced a week after the Monetary Authority of Singapore took unprecedented action to ease policy, while commenting that fiscal policy would have to take the “primary role” in efforts to shore up the country’s economy.
Economic data have already turned sour: February retail sales fell the most since last June and the city-state’s purchasing managers index plunged in March to its weakest level in 11 years.
Hard-hit industries, including tourism and food and beverage, have been seeking support to cope with new restrictions on eating out. A coalition of more than 500 restaurants wrote Saturday to Prime Minister Lee Hsien Loong that the next month would be “do or die” for many outlets, requesting policies like relief from rent bills, the Straits Times reported.
Heng addressed the appeals for rental relief in Monday’s announcement, noting that legislation would be introduced this week to allow for deferral of contractual obligations, including rent payments, for a period. The bill would ensure that a property-tax rebate announced earlier would filter through to tenants, Heng said.
As coronavirus ravages the global economy, with all regions vulnerable, analysts have repeatedly downgraded estimates for world growth, with many seeing GDP growth close to or below zero this year. Prospects for recovery are seen as mixed, with more economists projecting flatter economic activity for longer rather than the V-shaped rebound that was a popular bet early in the outbreak.