Following the $48.4b Resilience Budget on 26 March and the $6.4b Unity Budget in February, Deputy Prime Minister and Finance Minister Heng Swee Keat announced the Solidarity Budget of $5.1b. This brings the total stimulus to $59.9b, which is about 12% of Singapore’s GDP, according to OCBC Investment Research (OIR).
With the latest measures, the overall budget deficit for FY2020 will increase to $44.3b or 8.9% of GDP. To get a sense of how significant this is, in FY19, Singapore saw a deficit of $1.7b, which was just 0.3% of GDP.
To further support the country during the four weeks when the circuit breaker measures are in place, the Solidarity Budget aims to save jobs, and protect the livelihoods of people during this temporary period of heightened measures.
There will also be help for businesses to preserve their capacity and capabilities, to resume activities when the circuit breaker is lifted. In addition, there will be direct cash in hand for households, to help tide families through this difficult period. Should the circuit breaker be extended beyond four weeks, we believe there could be a possibility for further measures.
All in, the measures that the Singapore government is taking would be a supportive factor for the domestic equity market, and this latest Solidarity Budget is meant to tide the country over these four weeks. Should the circuit breaker last longer than expected, further measures may be required.
Helping where it hurts most
In this Solidarity Budget, the bulk of the money will be spent on labour retention, waiving foreign worker levy, the Self-employed Personal Income Relief Scheme (SIRS), amongst others. Such relief measures, such as the enhanced job support schemes (higher wage subsidies) and the waiving of foreign worker levy due in April, are believed to further insure against the risks of longer-term harm on the domestic labour market and corporate margins due to the COVID-19 outbreak.
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