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Keeping jobs, building for the future
B.1. The Government will implement a major fiscal package in response to this crisis. We are likely to experience the deepest recession in the Singapore economy since our independence, arising from the worst global economic decline in 60 years.
B.2. Budget 2009 will deliver a Resilience Package totalling $20.5 billion this year, to help Singapore see through this period of exceptional difficulty. The Package aims to save jobs to the maximum extent possible in the recession, and to help viable companies stay afloat. It also prepares Singapore to emerge with strength when the global economy recovers, and enhances our capabilities and competitiveness for the long term.
B.3. The Resilience Package will not get us out of the recession, as long as the global economy continues to contract. But it will help avert an even sharper downturn, and more lasting damage to the economy.
B.4. The Government will keep a close watch on the global situation and its impact on Singapore. We remain ready to undertake further measures if necessary over the course of the year and the next few years.
Key objective is jobs
B.5. Our key objective in this package is to help Singaporeans keep their jobs. The best way to give our people confidence during this crisis is to help them stay employed and retain their ability to support their families.
B.6. This is why the Resilience Package will focus especially on helping businesses to retain workers, by helping them to meet their costs and strengthen their cash-flow, and by enhancing their competitiveness. It is mainly a supply-side approach, aimed at keeping jobs. It will provide more support and confidence for the domestic sector of the economy than efforts to stimulate consumption demand directly.
Keeping our focus on the future
B.7. We will help businesses and Singaporeans with their immediate needs, so that they can stay afloat in the recession and look towards the future. But even as we deal with the immediate problems, this cannot be a Budget that is only about the short term. We should take the opportunity of this downturn to build up our capabilities and infrastructure, and position Singapore for its next phase of growth.
B.8. The Resilience Package will therefore keep up and accelerate our investments for the future. It will mean stepping up our efforts to equip Singaporeans with a world-class education in their youth, broadening training opportunities during their working lives, and providing the best care services for those in their silver years. We will provide further incentives for investments across our industries and help build up innovative capabilities among businesses small and large. And we will rejuvenate our neighbourhoods and develop suburban nodes, and move ahead with initiatives to ensure sustainable development, so that Singaporeans will enjoy an extremely liveable city in all its facets, even as our economy grows in the years to come.
Resilience Package: Five components
B.9. The Resilience Package of $20.5 billion for FY2009 will have five components:
- First, jobs for Singaporeans. We will spend $5.1 billion to help preserve jobs.
- Second, stimulating bank lending. We expect to extend $5.8 billion in government capital for a Special Risk-Sharing Initiative (SRI). Of this, a small fraction is likely to be eventually expended on provisions for loan losses.
- Third, enhancing business cash-flow and competitiveness. We will implement tax measures and grants for businesses that will cost $2.6 billion.
- Fourth, supporting families. We will spend $2.6 billion to support Singaporean households this year. This is on top of the benefits they will derive from the measures to preserve jobs.
- Fifth, building a home for the future. We will spend $4.4 billion on developing first class infrastructure for the island and on expanded provisions for education and healthcare.
B.10. These amounts are what the Package will spend this year. We will front-load some of the measures, beginning in March 2009. Certain measures will also stretch beyond 2009 and will therefore have an impact on future budgets, on top of the $20.5 billion package this year.
B.11. Together these initiatives will mean a significantly expansionary Budget in the financial year 2009. The Basic Balance is expected to be in deficit by 6% of GDP in FY2009 (before accounting for NIR or transfers to endowment and trust funds). This is the largest deficit the Government has budgeted for to-date.
Emerging stronger
B.12. This is therefore a major package for tackling an unprecedented recession and preparing for recovery. We will help our businesses and people with their immediate problems in this economic crisis. More than this, we will reduce taxes, and invest in every new skill and capability that will help us come out of this crisis more competitive. We will emerge stronger and ready to seize new opportunities, just as we did when we responded to the Asian Financial Crisis a decade ago.
ECONOMIC PERFORMANCE AND OUTLOOK |
JOBS FOR SINGAPOREANS |
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