A. Introduction

 

A. Introduction

  1. A1. Mr Speaker, Sir. I beg to move, that Parliament approves the financial policy of the Government for the Financial Year 1 April 2021 to 31 March 2022.

Fighting COVID-19

  1. A2. We have spent a year fighting the COVID-19 pandemic.
  2. A3. Last year, in addition to our usual spending, the Government committed nearly $100 billion through five Budgets to support Singaporeans, help tide businesses over this difficult period, and most importantly, keep everyone safe.
  3. A4. We faced the worst recession since our independence.
    1. a. The pandemic-triggered recession has hit both demand and supply simultaneously.
    2. b. Singapore’s GDP contracted by 5.4% in 2020.1
    3. c. The overall budget deficit for Financial Year 2020 is also the largest since Singapore’s independence, at $64.9 billion, or 13.9% of GDP.
  4. A5. Our fiscal response played a critical role in helping us contain the impact of the crisis.
    1. a. We averted the worst, and prevented deep economic scarring and permanent impairment of our economic strengths.
    2. b. Last week, the Ministry of Finance released an interim assessment of the COVID-19 Budget measures. Our early findings show that the combination of fiscal, monetary, and transitional measures, mounted as a whole-of-government response, has helped avoid a worse recession, avert job losses, and mitigate inequality.
      1. i. Without the fiscal and monetary policy measures, Singapore’s GDP would have shrunk by at least 12.4%, more than double the contraction we experienced.
      2. ii. These measures are also estimated to save or create 155,000 jobs on average over 2020 and 2021, preventing the resident unemployment rate from rising a further two percentage points in 2020.
      3. iii. Lower-income households received higher levels of support from some of the COVID-19 measures, such as the Workfare Special Payment and Grocery Vouchers.
      4. iv. While fiscal measures did most of the heavy lifting, the measures taken by the Monetary Authority of Singapore, to maintain an accommodative monetary policy stance, ease cash flow constraints, and ensure liquidity in the banking system, complemented the fiscal measures well.
      5. v. The Ministry of Law’s COVID-19 (Temporary Measures) Act 2020 also offered temporary relief to individuals and businesses for rental and various other contractual obligations.
    3. c. On the public health front, community cases have remained low and we have been on a path of gradual re-opening since June last year.
  5. A6. We were able to mount a whole-of-government response to COVID-19, without incurring a huge debt for future generations, because successive generations have built up strong reserves ahead of this crisis. I thank the President for her support for the use of Past Reserves to fund our response to COVID-19 so far.

Adapting Our COVID-19 Response

  1. A7. As we re-opened our economy, we shifted our measures from containment to restructuring, while continuing our support for Singaporeans, workers, and businesses.
    1. a. We transitioned our broad-based support to more targeted ones for firms, especially those in the hardest-hit sectors.
    2. b. We introduced measures to preserve core capabilities.
    3. c. We shifted our focus from job retention to job creation, and helped workers secure jobs in growth sectors.
    4. d. We set up the Emerging Stronger Taskforce amid the crisis to respond to the new realities.

Emerging Stronger in a Post-COVID-19 World

  1. A8. The global battle against COVID-19 is far from over. Many places are still experiencing high levels of infection.
  2. A9. The recovery in global economic activity is expected to be long-drawn, highly uncertain, and uneven across sectors and geographies.
  3. A10. The arrival of vaccines gives us hope that economies and borders can re-open more quickly. But it is no silver bullet.
    1. a. Vaccinating a large proportion of the population will take some time.
    2. b. The emergence of more infectious variants may raise the threshold for herd immunity and disrupt the resumption of economic activities. If a new strain that is resistant to existing vaccines emerges, a new round of vaccination will be needed, further delaying economic recovery.
  4. A11. This uncertainty is accentuated by several structural trends and challenges, including some brought to the fore by the pandemic. I will mention two:
    1. a. First, the rising protectionism over supply chains, resources, data, and technology. This has been accelerated by a heightened sense of vulnerability and distrust during the crisis.
    2. b. Second, the unprecedented levels of public debt globally to finance the extraordinary fiscal responses during the pandemic. These add to concerns over long-term sustainability of debt and risks of inflation over time.
  5. A12. The trajectory of the pandemic will determine the immediate trajectory of the global economic recovery. As a small, open economy, Singapore’s economic recovery is contingent on how the global situation plays out.
    1. a. Not everything is within our control.
    2. b. We need to adapt nimbly to the wide range of possible outcomes.
  6. A13. Since our independence, Singapore has weathered crisis after crisis, and emerged stronger. I am confident that we, as Singaporeans, can once again summon our resolve to tackle the challenges, and emerge stronger from this unprecedented crisis.
  7. A14. Let us seek to build a stronger Singapore:
    1. a. That is economically vibrant, so we can create good jobs for our people and opportunities for our businesses;
    2. b. That is socially cohesive, with a strong social compact and community spirit;
    3. c. That is a welcoming home, green and sustainable for generations to come; and
    4. d. That has the fiscal and social reserves to enable continued stability and progress.
  8. A15. Budget 2021 deploys our fiscal resources and the energies of our people, to realise our collective aspirations and build our future together.
  9. A16. I will now elaborate on our plans, with the details in the annexes.

Footnotes

1 Source: Ministry of Trade and Industry.