Thursday, 9 April 2020

Will Singapore become bankrupt?

A little girl's question drew a resounding "no" from Deputy Prime Minister and Finance Minister Heng Swee Keat in Parliament yesterday. In this edited excerpt of his Supplementary Budget Debate Round-Up Speech, Mr Heng stressed the importance of resilience and fiscal prudence to cope with the coronavirus crisis. He was rounding up debate on additional measures to help businesses and individuals cope with the pandemic. Three Budgets have been presented in 48 days to deal with the fast-escalating crisis.
The Straits Times, 8 Apr 2020

This year's Budgets provide direct support for families, with more for the lower income. This is how we support a resilient society. Additional support is available through the self-help groups and community development councils (CDCs)...

With this set of schemes, we balance between targeting our support for those who need it more, and flowing support quickly to large groups. It is not an easy balance, and we will do our best to calibrate this.

Some of our support has to be broad-based, so that we can flow the support to our people quickly. I encourage those who do not need the cash payouts to share it with those who need it more, by donating to or the Community Chest's Courage Fund, or to directly share it with others.

Mr Pritam Singh (Workers' Party MP for Aljunied GRC) noted that the Resilience and Solidarity Budgets have features of the New Deal in the US, and went on to ask if we can provide continued support beyond nine months, even after the pandemic subsides. He made a comparison to the New Deal, and asked if we should have a "living wage" for our essential services workers, including cleaners.

As Mr Singh himself pointed out, the "New Deal took more than six years and secured the US as a welfare state with a strong federal government and a perennial national debt problem". He went on to say "the comparison with the New Deal is nonetheless thought-provoking".

Indeed, we should think hard about this. While the New Deal was meant to bring the United States out of the Great Depression, its ideas have polarised American society. We still see this schism today - between liberals who support it for its comprehensive relief and reform programmes, and conservatives who oppose it for being hostile to business and growth.

The United Kingdom went through a similar phase, with its governments swinging between the left and right of the political spectrum. I was a student in the United Kingdom in the early 1980s, when Mrs Margaret Thatcher rode to electoral victory when ordinary Britons got fed up with the Winter of Discontent in 1978-1979 where there were widespread strikes in the public sector, including in the NHS (National Health Service).

It is important that in any policy-making, we pay attention to the subtle but significant changes in the tone of society, in the attitudes of people and in relationships which will take years to show, and which are not easy to reverse.

In making good public policy, we should be rigorous and clear-headed, and not rely on some ideological short cuts or labels, without thinking deeply about interactions and longer-term effects.

For our Little Red Dot, we must have the courage and wisdom to do what is right for us - and not rely on simple ideology or fad or fashion of the day.

For this Government, it has never been a question of whether we "want to spend". Rather, it is a question of "how do we make the best use of resources, to achieve the best outcome for our people".

If we stay adaptable, we can keep adjusting our social security system according to the needs of the day.

For example, the recent wave of digitalisation has brought great rewards to the innovators, but also put pressures on employment and wages for older workers. We have responded with social support schemes like the Workfare Income Supplement.

To help tide our people through immediate challenges in this crisis, we have been adaptable and introduced schemes like SIRS (Self-Employed Person Income Relief Scheme) and the COVID-19 Support Grant.


Let us commit to making sure that what we do is fiscally sustainable, not just in this term or next term of government, but for our future generations.

Our ability to put together a support package for Singaporeans amounting to 12 per cent of GDP, without borrowing against our future, is testament to the optimal fiscal balance we have sought to maintain over the years.

But the Government cannot do this alone. In the spirit of SG Together, I am glad that many are stepping up to help others.

The mayors and their five CDCs have stepped up local assistance schemes to support the heartlands, and partnering local merchants to do so. Our charities, IPCs (Institutions of a Public Character) and self-help groups have also come forward spontaneously to support Singaporeans in need.

The Community Foundation of Singapore has launched the Sayang Sayang Fund to boost the morale of front-line healthcare workers with transport vouchers and some cash support, and provide disadvantaged students with support for their meals. In just two months, the fund has raised $1.1 million from more than 1,500 donors.

Many Singaporeans have been helping one another, distributing hand sanitiser, masks and even meals to those who need them more. Some even offered their homes to Malaysian workers who were affected by the Movement Control Order. Singaporeans are also taking care of the seniors amongst us.

These are spontaneous acts of community support, and I hope they inspire more to do the same. This is the social cohesion and resilience that we must have.


COVID-19 will re-shape our world and amplify the global structural shifts already under way. With these shifts come risks as well as opportunities.

It will accelerate structural shifts in global supply chains. Global and regional businesses will place a higher premium on locations that offered stability, reliability and effective governance. Overall, trust will command a higher premium.

It has also accelerated digitalisation and adoption of technology in our daily lives. Many more firms, workers and consumers have had the opportunity to embrace new models of remote working, online learning, telemedicine and e-commerce. They will not automatically switch back to their previous habits.

We are in a good position to make the most of these opportunities in a post-COVID-19 world. To do so, we will redouble our efforts to position Singapore as a global-Asia node of technology, innovation and enterprise. Even during this period, companies have continued to engage Singapore on new projects and the development of new capabilities.

Just last week, Hyundai announced its opening of an innovation lab in the Jurong Innovation District to develop and test technology across the automotive supply chain, and trial electric vehicle manufacturing. In the same week, ExxonMobil held a virtual foundation-laying ceremony to deploy new technology to upgrade its integrated refining and petrochemical complex.

We will also press on with our Smart Nation and R&D efforts. We will continue building smart towns like our Punggol Digital District, and our efforts in deploying autonomous vehicles.

Businesses need to take the opportunity to transform now, as the post-COVID-19 landscape will be vastly different. The question we should ask ourselves even now is when that day comes, what sort of world will it be, and how ready Singapore will be to march forward again.

We should think ahead, on how we can deepen economic and social resilience. In this spirit, we will set up two initiatives - an Emerging Stronger Taskforce on economic resilience and a new emphasis on social resilience under the Singapore Together movement.

The Emerging Stronger Taskforce under the ambit of the Future Economy Council is to help our economy bounce back from the crisis. Minister Desmond Lee and Mr Tan Chong Meng, Group CEO of PSA International, will co-chair this task force, to review how Singapore will stay economically resilient and build new sources of dynamism in a post-COVID-19 world.

The Singapore Together movement, led by Ministers Indranee Rajah and Desmond Lee, will mobilise Singaporeans to explore how we can deepen our social fabric and partnerships between government and people in Singapore, and between Singaporeans and people around the world.

This will be a whole of nation effort, which will take our collective energies and ideas to do well. We will have a series of national challenges across different domains to encourage ground-up participation.

One of the first challenges is the "Singapore Together Stay Home for Singapore Challenge". I am asking all of us to be a part of it. These four weeks of circuit breaking will feel unusual and unnatural. The challenge is to help ourselves and others stay home and do so purposefully and positively.

As we stay home, how might we thrive, by staying healthy and learning? How might we connect with our loved ones and community? How might we help others? How might we get help?

This will be a time for reflection, to learn something new, bond with loved ones, to show care and support for one another, and do something active and constructive for the community.


We are entering uncharted waters in the fight against the COVID-19 outbreak, and we cannot predict with precision how long this will be. I presented the Unity Budget to this Chamber on Feb 18. Thirty-seven days later, on March 26, I presented the Resilience Budget. And 11 days later, yesterday, I presented our Solidarity Budget. Three Budgets, within just 48 days.

We are dedicating close to $60 billion, amounting to 12 per cent of our GDP, to deal decisively with the situation at hand. The three Budgets make up our largest Budget in any one financial year, in dollar amount and as a percentage of GDP. This is the largest spending in any financial year in our nation's history.

We also incurred the largest budget deficit ever - $44.3 billion, or 8.9 per cent of GDP. This deficit alone is half of our total spending in the preceding financial year.

We had to seek the President's approval to draw on our past reserves, not once, but twice. In total, the President has given her in-principle support for the Government to draw up to $21 billion from our past reserves for the Resilience Budget and the Solidarity Budget.

As Finance Minister, I am extremely grateful that we have been able to tap the deep financial reserves - our current and past reserves which have been so carefully built up, invested and managed. This has allowed us to respond to the crisis without having to borrow, and without burdening our future generations with repayment obligations.

But just exactly how deep are our reserves? Members would know that our reserves comprise assets invested by MAS (Monetary Authority of Singapore), GIC and Temasek. MAS and Temasek publish the size of the funds they invest. It is the size of the funds invested by GIC that is not published. We do not disclose the total size of our reserves for the sake of our national security and strategic interests.

As a small country without any natural resources and highly dependent on imports, our reserves are vital to our overall economic and financial stability, and our well-being.

They provide a key defence for Singapore in times of crisis. During the 2008 global financial crisis, the late President S R Nathan approved the provision of $150 billion from our past reserves to guarantee bank deposits in Singapore. This move calmed our depositors, and we did not have a single bank run during that very difficult period. All our depositors' monies were safe. In 2009, President Nathan approved a draw of $4.9 billion from the past reserves to fund the Resilience Package then, to help us overcome the crisis.

Having our reserves therefore played a key role in helping us emerge stronger from that crisis. In fact, our economy rebounded quickly.

Our reserves serve as a strategic defence. They give us the wherewithal to resolutely defend the Singapore dollar against speculative attacks. This contributes to a stable Singapore dollar, which in turn bolsters the confidence of investors and citizens.

Our reserves are thus no different from SAF's (Singapore Armed Forces) arsenal. No country's armed forces will ever tell you exactly how much ammunition and weaponry they really have. To do so is to betray valuable intelligence to potential adversaries. This is obviously not a wise defence strategy, and likewise should not be adopted for our financial reserves.

What Members should focus on are the policies and programmes, especially those which may require the use of reserves. Debate the merits of these programmes, including the expenditure required for them. But let's be clear - it is neither in the interest of Singapore, or Singaporeans, to repeatedly ask about the size of our reserves.

We are in the middle of a storm, and I am very disappointed that Mr Pritam Singh has used this occasion to raise this question again.

Many have urged us, year after year, to spend more of our reserves to fund our growing expenditure, suggesting that we do not need to save so much or to ever raise taxes.

But we kept the discipline, and stuck to our principle of using the returns from our reserves in a prudent manner. We do not view the reserves as a piggy bank to be broken at will, to provide the Government with a convenient source of additional revenue. We avoided running deficits in good years, and consistently saved.

If we had succumbed to the political pressure to spend more of our reserves in good years, we would not have had the war chest to deal with critical moments, such as now. And to do even more, if necessary, even in the next term of government.

But the aftermath of the COVID-19 outbreak may be with us for a long time, and we will need to deal with it on a sustainable basis. If the crisis deepens, our economy and revenues will shrink, we may have to make use of our past reserves again for a recovery.

While we must make plans, and we are, at this hour, let us focus our minds fully on making the best use of this very unprecedented Budget, to build social and economic resilience.

And if there is a need, we have the institution of the Government and the Elected President to decide on how best to use our resources to manage a crisis.

So indeed, this crisis has re-affirmed the value of our key institutions and the key tenets of our prudent fiscal policy - to spend prudently, invest wisely, and plan consistently for the long term.


Beyond our financial reserves, I am grateful that we have been able to tap the deep reservoirs of strength and resourcefulness of our people.

Without the strength, resourcefulness, trust of our people, all the right measures won't be worth the dollar tag on them. But, with these, our combined strength is worth so much more.

Our healthcare workers, Home Team officers, cleaners and many other unsung heroes have carried out their duties with commitment and courage.

They have had a very tough time. They have to stay alert and careful, while working long hours and weekends. It is very moving that our people recognise this and pour out strong support for them.

Many Singaporeans have made videos and written letters of appreciation to spur our front-line workers.

Students and staff from Yew Tee Primary School made personalised cards and a video to show support and appreciation for the front-line staff of various hospitals, and our police officers. And there are many others.

Indeed, our national stock of resilience is made up of all our individual stocks of resilience.

This has been an extremely hectic period for me, Minister Lawrence Wong and Minister Indranee Rajah, and all my Cabinet colleagues. I am grateful to my staff in MOF (Ministry of Finance), many of them young or with young families.

They have been working tirelessly for almost 10 weeks now - from Pongal, to Valentine's Day, to Chinese New Year, and over many weekends. It is the first time that MOF officers have had to prepare three Budgets within 48 days.

It is not only hectic. It has been emotional. We know what is at stake. Our lives, our livelihoods, our loved ones. Our home and nation. I know people like to call us at MOF bean counters, because we are always counting the costs and benefits of things.

We count, because you count.

We weigh up our reserves of strength, measure out the right actions to help our people and businesses, pace ourselves to go the distance, and save up for the future. We count, to protect our people and our home.

Indeed, as we draw down on our reserves to tackle this generational crisis of unprecedented scale, we must uphold our responsibility to steward our reserves properly in our time, for the benefit of our future generations.

Yesterday, Minister Khaw Boon Wan shared the story of his Primary 2 granddaughter who had been urging his wife and their helper to put on masks and to observe safe distancing.

And less than 24 hours ago, when I was here in this Chamber delivering the Solidarity Budget, a young mother was at home watching it live together with her daughter.

The mother later wrote to me saying that, afterwards, her daughter asked her: "Will Singapore become bankrupt?"

I was surprised and glad that her daughter and Minister Khaw's granddaughter could understand such values at such a young age.

As adults, let us uphold our values, and not let our children and future generations down. It is precisely for them that my team and I are determined to exercise fiscal discipline and prudence.

The mother who wrote to me asked for an answer for her daughter. Will Singapore become bankrupt? No! We will never let Singapore become bankrupt.

The Spanish flu occurred in 1918, and COVID-19 in 2019. A hundred years from now, should there be another unprecedented crisis, will Singapore have the wherewithal to tackle it? It depends critically on the values of our people.

We have managed to weather this crisis so far because of our world-class healthcare system, our strong finances, our administrative capacity, our strong tripartite partnership and, most importantly, our exceptional people.

These were not built overnight. They require long-term planning, deliberate investment, stewardship of resources and careful build-up of capabilities.

This is only possible because of the values that this Government and our people have upheld across generations, which have allowed us to fight the crisis from a position of strength. These are the values of discipline, prudence and long-term thinking.

The journey ahead to the end of this crisis will likely still be long and uncertain. But my team and I will continue to stay vigilant and partner Singaporeans and people around the world. Difficult decisions will need to be made during this period, and we will do so with Singaporeans' interests at heart. We will get through this together.

Let us stand united, resilient and in solidarity. Singapore Together, Majulah Forever!

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