SINGAPORE: The Singapore Government will draw S$31 billion from past reserves to fund the measures in the Fortitude Budget, with a larger sum set aside for contingencies.
Altogether, Singapore is drawing up to a total of S$52 billion from past reserves this financial year – an unprecedented amount.
President Halimah Yacob has given her in-principle approval for the draw on the reserves.
The Fortitude Budget delivered by Deputy Prime Minister Heng Swee Keat on Tuesday (May 26) was the fourth Budget for 2020 and will cost S$33 billion.
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LARGER CONTINGENCIES FUNDS
Each year, Singapore sets aside S$3 billion as a buffer in the Contingencies Fund and the Development Contingencies Fund.
An additional S$13 billion will be put aside so that the Government can respond quickly to urgent and unforeseen needs swiftly, said Mr Heng, who is also the finance minister.
"This will allow the Government to respond quickly to any unforeseeable developments arising from COVID-19," he said.
"This could include public health or fiscal measures that have to be put in place quickly, if the medical or economic situation deteriorates. We will do our best to avoid this, but we must be prepared for any eventuality."
The use of the contingencies funds is subject to proper governance and accountability, Mr Heng added.
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Under the Constitution, the Minister for Finance may make advances from the funds if the minister is satisfied that there is an urgent and unforeseen need for expenditure, and the President concurs with the making of such advances.
The amount advanced shall be included in a Supplementary Supply Bill or Final Supply Bill, which will be presented to and voted on by Parliament, as soon as practicable.
"This approach is appropriate and prudent, given the fluid situation which may require (the) Government to act swiftly in the coming months," Mr Heng said.
CLOSE TO S$100 BILLION FOR FOUR BUDGETS
With the Unity, Resilience and Solidarity budgets, and now the Fortitude Budget, the sum set aside to fight COVID-19 will add up to S$92.9 billion, or 19.2 per cent of Singapore's GDP.
"For the Unity, Resilience and Solidarity budgets, we used up almost all our accumulated surpluses since the start of this term of Government. But what we need to deal effectively with COVID-19 has grown so much that we have no choice but to draw on past reserves," said Mr Heng in Parliament.
In the earlier Resilience and Solidarity Budgets, the President gave approval to draw up to S$21 billion from past reserves.
READ: COVID-19 Resilience Budget: ‘Landmark’ S$48 billion package to tide Singapore through ‘unprecedented’ crisis
The overall budget deficit for FY2020 will increase to S$74.3 billion, or 15.4 per cent of GDP. This is up from S$44.3 billion, or 8.9 per cent of GDP.
"This is the largest overall budget deficit in Singapore’s history since our independence," said Mr Heng.
While the amount drawn from the reserves is significant, Singapore has the fiscal resources to mount this response, said Mr Heng.
"Every dollar that we have saved has been saved by careful counting over the years. In spending this national savings now, we must make every dollar spent count," he said.
Watch the full statement: