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Singapore warns of widening deficit as virus hits

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Action: Finance minister Heng Swee Keat has pledged support

Action: Finance minister Heng Swee Keat has pledged support

REUTERS

Action: Finance minister Heng Swee Keat has pledged support

Singapore will post its biggest budget deficit since at least 1997, pledging S$6.4bn (€4.3bn) in dedicated support for an economy being slammed by the coronavirus outbreak.

The deficit will widen to 2.1pc of gross domestic product in the year through March 2021 from a projected 0.3pc in the current fiscal year, finance minister Heng Swee Keat said.

The median in a Bloomberg survey of economists was for a fiscal 2020 shortfall of 1.5pc of GDP.

Faced with an election due by April 2021 and a virus outbreak that is having a worse impact than SARS, the government is stepping up its support for an economy that was already under strain.

The state will set aside S$800m to fight and contain the coronavirus outbreak, and will provide two economic support packages totalling S$5.6bn to assist businesses and consumers.

"This year, we usher in a new decade, one marked by tectonic shifts in our operating environment, and major uncertainties," Mr Heng, who is also deputy prime minister, said in his budget speech in parliament.

The government is putting in every effort to "slow down the spread of the virus", he said.

Singapore had been planning additional support for businesses hit by the ongoing US-China trade war before the coronavirus outbreak.

The city state, which has more than 70 confirmed cases of the virus, downgraded its growth outlook on Monday.

"Such exceptional circumstances definitely call for a robust fiscal response," said Irvin Seah, a senior economist at DBS Group Holdings.

"The very prudent fiscal planning that we always abide to over the years has enabled us the ability to respond strongly in such a difficult period."

Bloomberg

Irish Independent