Singapore delivered a second stimulus package of S$48 billion ($33 billion) to fight the coronavirus outbreak, drawing on national reserves for the first time since the global financial crisis to support an economy heading for recession.
The additional spending will push up the government’s virus-related relief to almost S$55 billion, or 11% of gross domestic product, Finance Minister Heng Swee Keat said in a speech in Parliament Thursday.
“This extraordinary situation calls for extraordinary measures,” Heng said.
The stimulus package comes just five weeks after Heng’s annual budget, which allocated S$6.4 billion for health care and support to businesses and households hurt by the virus outbreak. The economy’s outlook has deteriorated substantially since then, with the government earlier Thursday downgrading its growth projections for this year to a contraction of 1% to 4%.
“We are facing an unprecedented crisis of a highly complex nature,” Heng said. “In economic terms alone, this will likely be the worst economic contraction since independence.”
Singapore’s export-reliant economy is coming under strain as the virus disrupts supply chains and travel. Shutdowns in key trading partners, like Malaysia, have choked off labor and food supplies.
The government last tapped its reserves in 2009 when the economy faced a recession during the global financial crisis. The government delivered a S$20.5 billion stimulus package at the time, and drew down reserves by S$4.9 billion.
Under the constitution, the president must approve the use of reserves. In a statement to Parliament on Thursday, President Halima Yacob said she supports the drawing down of past reserves under current conditions.
“We need to do our utmost to help our businesses and people quickly,” she said in the statement. “It is a matter of survival.”
©2020 Bloomberg L.P.