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G. Fiscal Outlook

 

G. Fiscal Outlook

  1. 303 Sir, let me now go through our fiscal outlook.
  2. 304 At the onset of COVID-19 in FY2020, we were looking to draw up to $52 billion from Past Reserves to protect lives and livelihoods. Given the uncertainty of the crisis at that time, we had to set aside sufficient resources to handle any downside scenarios.
  3. 305 We now expect to utilise a lower amount of $31.9 billion from Past Reserves for COVID-19 relief in FY2020. This is the result of our swift and decisive response, which allowed us to avert worse public health outcomes. We saw a stronger-than-expected rebound in our economy and businesses, and did not need to utilise measures like loan loss provisions which we had set aside.
  4. 306 For FY2021, we had planned to draw up to $11 billion from Past Reserves for the COVID-19 Resilience Package. We now expect to draw a lower amount of $5 billion from Past Reserves. This is mainly due to a reduced expenditure of $10 billion for the COVID-19 Resilience Package, underutilisation of Ministries’ expenditures primarily due to projects delayed by COVID-19, as well as one-off revenue upsides including from Vehicle Quota Premiums and stamp duties.
  5. 307 We also tapped on our existing resources first to provide short-term relief when we had to tighten restrictions periodically last year. For example, the $2 billion worth of economic relief measures introduced during the Heightened Alerts last year was resourced through a reallocation of funds.
  6. 308 During the Stabilisation Phase, we introduced $1.4 billion worth of support measures. For timely implementation of these measures, we took an advance from the Contingencies Fund. I will now replace the advances through the Supplementary Budget for FY2021.
  7. 309 For FY2022, we will set aside $6 billion to maintain a multi-layered public health defence.
    1. a. This is necessary for us to react nimbly and confidently to the evolving COVID-19 situation.
    2. b. Given the extraordinary nature of this pandemic, we will resource this COVID-19 public health expenditure for FY2022 from Past Reserves.
    3. c. The President has given her in-principle support for this.
  8. 310 This brings the total expected draw on past reserves over FY2020 to FY2022 to up to $42.9 billion. This cumulative draw is less than the initial draw of $52 billion that the President had originally agreed to for FY2020. It reflects our prudence in the use of Past Reserves. (See Annex G-1.)
  9. 311 Beyond the crisis, our spending needs will continue to grow, as we tackle structural shifts and invest more to deliver on our longer-term priorities as I have laid out just now.
  10. 312 In order to meet new spending needs, besides raising revenue, we will continue to manage our expenditure growth. Since FY2017, we have implemented a 2% cut in the budgets of all Ministries and Organs of State to ensure we spend judiciously and achieve good value-for-money outcomes. From FY2023, I will apply a further 1% cut to the budgets of Ministries and Organs of State. Funds from this adjustment will be channelled towards new priorities.

FY21 and FY22 Overall Fiscal Position

  1. 313 Let me now summarise our overall fiscal position. For FY2021, I expect an overall deficit of $5 billion or 0.9% of GDP.
  2. 314 For FY2022, our budget remains expansionary to support the economy. I expect an overall deficit of $3 billion or 0.5% of GDP. (See Annex G-2.)