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.