Halimah Yacob: Gov’t considering using Past Reserves “to support our people and our businesses”

Singapore—In the light of the current hit Singapore is taking because of the Covid-19 outbreak, President Halimah Yacob said in a Facebook post that the Government is looking at endeavours to support the country’s people and businesses, including “using the Past Reserves if necessary.”

She wrote on Wednesday (March 11), “Many of our companies, particularly those related to the tourism industry, but more broadly other sectors as well, are bleeding because of disrupted supply chains, rapidly falling demand and tightening cash flows.”

The constitution of Singapore states that the President has veto power, or may disagree with, proposals from the Government concerning fiscal matters related to the country’s reserves.

Madam Halimah pointed out that Heng Swee Keat, the country’s Finance Minister and Deputy Prime Minister has already said that a second stimulus package is being worked on, since the wider spread of the novel coronavirus to other areas such as the United States and Europe, and experts have said that the outbreak may last until the end of the year.

She added, “The crashing oil prices seriously aggravated the situation.”

“In such a situation, we must do our utmost to support our people and our businesses, including considering using the Past Reserves if necessary. If our public health is at stake and our people’s welfare affected, we need to do the necessary.”

The country’s reserves have not been tapped for over a decade. In January 2009, Singapore was in a recession during the global financial crisis, and used S$4.9 billion for the purpose of funding property and personal tax rebates. Cash handouts in the aid of companies and employees were also given.

How much Singapore has in its reserves is not disclosed, and while critics have deemed Government policies as “excessively prudent,” it has defended its policies as needful for times of emergency.

Regarding oil prices, Madam Halimah was referring to the free fall oil prices have taken beginning from this week, due to increased supply and decreased demand, sparking fears of widespread bankruptcies and layoffs in countries whose economies are dependent on oil.

The lower demand for oil is related to the coronavirus outbreak, as factories have closed in China and air travel has been heavily curtailed.

Oil prices are currently at a four-year low, at $31 per barrel, with experts saying that it could reach even as low as $20 per barrel if the oil price wars continue. At the moment, feuding involving Russia, Saudi Arabia, and OPEC is ongoing.

Despite conventional thinking that consumers stand to gain more in when oil prices are low, in a situation such as the Covid-19 outbreak, which was declared to be a pandemic by the World Health Organization on Wednesday (March 11), everyone around the globe is affected by the economic fallout.

While low oil prices traditionally help the economy, in a time such as now when the demand is low due to lower factory output and grounded flights, now matter how low oil prices get it cannot, at this point, stimulate demand to spur on the economy. —/TISG

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Singapore lowers growth forecast as virus hits economy