International Business & Economy SG Budget 2020: Analysts estimate Covid-19 relief package of S$700m

SG Budget 2020: Analysts estimate Covid-19 relief package of S$700m

The economic impact of the Wuhan virus outbreak may be stronger than with SARS in 2003, due to deeper ties with China

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Singapore—The national Budget is scheduled to be announced on Tuesday (Feb 18) with analysts expecting that a virus relief package of at least S$700 million will be included.

A senior economist at DBS, Irvin Seah, has been quoted by Reuters as saying, “The latest coronavirus outbreak has thrown a spanner in the works. Couple that with an impending general election and the massive accrued surpluses, expectation for the budget is naturally high.”

Cost of living issues will also be addressed in Budget 2020, as announced by Second Minister for Finance Indranee Rajah in a radio interview last week.

Concerning the national Budget, Deputy Prime Minister and Finance Minister Heng Swee Keat already said last month that the country stands “ready to help businesses and workers affected by the outbreak,” while Lawrence Wong, Minister for National Development Lawrence, said last week that the Government is “looking at a strong Budget for 2020,” that would address what could be done “to assist Singaporeans impacted by this Wuhan virus”.

The virus relief package has been estimated by economists from Maybank and Citi to be at least S$700 million. This is comparable to the S$230 million relief package the Government provided during the SARS outbreak of 2003.

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DBS, the country’s largest bank, has predicted that this year’s deficit will be at S$7.9 billion, the highest in 15 years, in large part due to the Covid-19 outbreak.

However, this may not come to pass. In 2009, amid the global financial crisis, the Government predicted the deficit to be at S$8.7 billion deficit, while in actuality Singapore saw only a shortfall of S$819 million.

However, the country may have to prepare for a worse economic impact than the one it suffered with the SARS outbreak, due to stronger economic ties to China, as well as a drop in tourism of as much as one-third for the year.

Netizens reacted to Mr Wong’s announcement of a “strong Budget” with a wish-list of sorts, citing specific areas where they hope to benefit from.

Some people commented on the GST, or Goods and Services Tax, which the Government plans on increasing from 7% to 9% between 2021 and 2025. 

Straitstimes.com reports Ms Indranee, who is also the Minister in the Prime Minister’s Office, saying last week that Budget 2020 will be a comprehensive one, with a broad scope that addresses various issues that workers and families today are facing.

She assured that the country has “a sound position and strong fundamentals,” and that the financial cost of the virus, which originated in Wuhan, a city in central China and has gone on to affect around 25,000 individuals all over the world, can be withstood.

Ms Indranee added, however, that the country has “to make some adjustments to make sure companies and workers are supported.”

The country has weathered similar crises before, and Ms Indranee pointed out that in such times crises may be turned into opportunities. -/TISG

Read related: SG Budget 2020 will support coronavirus fallout, cost of living needs says Indranee Rajah

SG Budget 2020 will support coronavirus fallout, cost of living needs says Indranee Rajah

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