|
|
| • EXCH RATES |
|
Baht/$ 35.13/16 (Bid/Ask)
|
GOLD |
12,300
-
|
|
It could be triple the $800m projection; officials also promise to help SMEs get loans.
Chuang Peck Ming in Singapore
The Singapore government is likely to end the current fiscal year with a budget deficit of more than three times the S$800 million first projected, as it has stepped up spending to shield the economy from the global downturn that has pushed Singapore into recession.
"We now expect expenditures to be significantly higher than budgeted. ... possibly more than three times larger than the initially estimated $800 million," Finance Minister Tharman Shanmugaratnam said in a written answer to a question raised this week in the legislature by MP Gautam Banerjee.
The government would share risks with banks to ensure that small and medium-sized enterprises (SMEs) continued to have access to credit.
Touching on the main reasons why the deficit would rise, Mr Tharman cited the high cost factors in infrastructure projects, additional spending on the new and enhanced Marriage and Parenthood measures, and higher payouts from the enhancements in the city-state's Growth Dividends and U-Save rebates.
"Further, there may also be some dampening of revenues in view of the lower-than-expected economic growth and more subdued property transactions, especially in the last two quarters of the fiscal year," he added.
The deficit will be funded from a surplus of S$6.4 billion accumulated in the 2007 fiscal year to the end of last March.
"We are not seeking to reduce this deficit, either by trimming government expenditures or raising additional revenues," Mr Tharman said. "The larger deficit is an appropriate fiscal stance in the context of an economy that has entered a slowdown."
He said the government had stepped up spending over the year, "so as to allow for a more expansionary budget in the current economic environment".
"They recognise that the bigger deficit would be a stimulus for the economy - I think their focus is more on making Singapore an attractive place for financial activity, rather than actual injection of spending," said David Cohen, an economist with Action Economics.
The government is due to release the final gross domestic product performance for the third quarter, which is expected to confirm preliminary data showing a recession with two straight quarters of economic contraction.
Singapore was the first economy in Asia to officially enter a recession, followed by Hong Kong and Japan. The recession has fed through to companies with job cuts at DBS Bank and the steelmaker FerroChina failing to pay loans.
Mr Tharman told Parliament that borrowing costs had started to ease from over 2% in the quarter to Sept 30 to about one percent currently.
"As far as the inter-bank market is concerned, there has been sufficient liquidity in the system," he said. "We have not seen the market freeze up, as happened in some other global financial centres in recent months."
Bank lending to non-bank customers is still rising, but Mr Tharman adds that "some tightening of bank credit is inevitable in an economic downturn".
"The Monetary Authority of Singapore's assessment is that while there is no large-scale credit crisis in Singapore, some segments of borrowers may face higher borrowing costs."
He said the government would announce enhanced loans schemes soon to give SMEs access to credit. "What government can and will do is to enhance the various government schemes that are in place to help our small and medium-sized enterprises retain access to credit. Most of these schemes involve government risk-sharing with the banks on loans to SMEs."
Published in Business Times on Nov 19
Prev
1
2
3
4
5
6
7
8
9
10
11
12
13
Next
