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.