Thursday, January 22, 2009

Singapore's USD13.7 Billion Resilience Package

Singapore has just unveiled their Budget 2009. I'm still poring over it. There's a link at the end of the post to the web page that contains the full text of the Singapore 2009 Budget.

The Singapore Budget contains a S$20.5 billion (US$13.74 billion or RM49.5 billion) stimulus package to help companies and save jobs along with a one percentage point cut in corporate tax as the small island state copes with its worst-ever recession.

The stimulus package (called the Resilience Package), comes on top of regular government spending, includes S$5.1 billion on training and other measures to save jobs and S$5.8 billion to stimulate bank lending.

To paraphrase the Singaporean Finance Minister, Tharman Shanmugaratnam, the so-called resilience package will not get Singapore out of a recession. But it will help avert an even sharper downturn, and more lasting damage to the Singaporean economy.

The Resilience Package of S$20.5 billion for FY2009 will have five components:


  • First, jobs for Singaporeans. They will spend S$5.1 billion to help preserve jobs.
  • Second, stimulating bank lending. They expect to extend S$5.8 billion in government capital for a Special Risk-Sharing Initiative. A small fraction of this is likely to be eventually expended on provisions for loan losses.
  • Third, enhancing business cash-flow and competitiveness. They will implement tax measures and grants for businesses that will cost S$2.6 billion.
  • Fourth, supporting families. They will spend S$2.6 billion to support Singaporean households this year. This is on top of the benefits the households will derive from the measures to preserve jobs.
  • Fifth, building a home for the future. They will spend S$4.4 billion on developing first class infrastructure for the island and on expanded provisions for education and healthcare.

The Singapore government aims to front-load the spending on some of the measures, beginning in March 2009. Certain measures are expected to stretch beyond 2009 and will therefore have an impact on future budgets, on top of the S$20.5 billion package this year.

It is a significantly expansionary Budget in the financial year 2009. There will be a Budget deficit of 6% of GDP in FY2009. This is the largest deficit the Singapore government has budgeted for to-date.

For the serious readers read the full Budget here.

5 comments:

An-Nimr said...

De minimis,

Wow, now THAT is the kind of thing people wanna hear...I wish we can hear it over here...instill some confidence. Times are gonna be real hard...

de minimis said...

Hi An-Nimr

Yes. The reason for my highlighting the neighbouring country's budget is not because I like them. Far from it. But, we must always be aware of what others are doing. And, where we can, we should try to learn from others.

In this case, we look forward to bold measures and being given more details about the economic situation for 2009 and, if possible, 2010 and to hear more specific policy initiatives instead of vague statements.

Raison D'etre said...

DM,

Was literally doing the same yesterday afternoon: part of my job scope ( :) , lucky me..)

Was struck by the simplicity and straight forward talking of the Ministrer's speech.

Now, why can't our budget go the same way?

Anyway, the report 6% deficit from the allocations is SUBSTANTIAL.

I wonder if our own government would dare go to such extent in terms of allowing its rakyat a buffer zone while the economy gradually finds it footing, eh?

Notice the word "Singaporeans" used early on in the text? We should so the same here when it comes to who gets first benefit from any stimulus package.

Alas, our manufacturing and construction sectors are too inundated by foreign workers for this to occur.

de minimis said...

Hi RD

That's a nice job scope. I don't mind reviewing documents for a living ... wait a minute ... that could also be describing part of what I do! :D

I have a lurking suspicion that it isn't that our govt lacks courage. I think the problem is that there is insufficient intelligent analysis of economic data, in sufficient skilled econometrists to do sensitivity analysis and projections, insufficient trained economists who can make accurate assumptions (maybe because everyone only likes "yes-men" nowadays).

If the above issues are dealt with by the political masters, there is no doubt that Malaysia has a large talent pool. Many of the fellas working for the southern neighbour are from our talent pool anyway.

Anonymous said...

Malaysia still in "denial mode" yet requested another 7B without any reference to the first 7 B. Malaysia Boleh.
Najis said that he still does not know the size of the downturn/recession/global meltdown etc etc. to actually plan. I just do not know how to rate/grade him, a moron or a nimcoompoop.