S'pore unveils S$11.3b economic relief package
S'pore unveils S$11.3b economic relief package
Agence France-Presse, Singapore
The Singapore government on Friday announced an S$11.3 billion
(US$6.3 billion) off-budget package to help the city-state cope
with its deepest recession in more than 30 years.
Announcing the wide-ranging package in parliament, Deputy
Prime Minister Lee Hsien Loong said the relief measures were
equivalent to seven percent of gross domestic product and would
result in a government budget deficit of four billion dollars in
the current fiscal year to March.
"The Singapore economy is in a severe slowdown. The sustained
contraction over the last three quarters is the steepest that
Singapore has experienced," said Lee, who is also chairman of the
Monetary Authority of Singapore.
It was the second relief package on top of measures worth $2.2
billion announced in July after Southeast Asia's most advanced
economy fell into recession.
"Since that interim package, conditions have indeed worsened.
This was happening even before the terrorist attacks of Sept. 11
(in the United States)," he said.
Singapore's gross domestic product (GDP) contracted a record
5.6 percent year-on-year in the third quarter and the government
forecast a fall of 3.0 percent for the full year.
Hopes of an early recovery evaporated with last month's
terrorist attacks against the United States and the economy is
likely to continue shrinking into the first half of next year.
The biggest chunk of the relief package, which analysts said
was the biggest in the island's history, would see $3.5 billion
used to jumpstart infrastructure projects, said Lee.
More than 100 public infrastructure projects would be
implemented within the next 18 months, he said.
Corporate and personal income tax and fee rebates worth $3.0
billion was the second biggest item in the package, followed by a
novel national share scheme valued at $2.7 billion aimed at
redistributing wealth.
Financial assistance for local companies and lower income
Singaporeans along with funds to retrain workers make up the
remainder of the package.
At the same time, ministerial salaries and those of senior
public sector officials would be cut to "send a signal that this
is a grave situation," Lee said.
He said the mandatory employers' contribution to the state-
managed pension scheme would remain at 16 percent of a worker's
wage.
But this could be reduced should the economic situation
worsen, Lee said.
The employers' contribution, normally at 20 percent, was cut
to 10 percent at the height of the 1997-98 financial crisis and
gradually restored to the current rate.
Lee told Singaporeans to "expect low growth, more
retrenchments and higher unemployment" over the next 12 to 18
months.