SINGAPORE delivered a second stimulus package of S$48 billion (RM144.67 bil) to fight the coronavirus outbreak, drawing on national reserves for the first time since the global financial crisis to support an economy heading for recession.

The additional spending will push up the government’s virus-related relief to almost S$55 bil, or 11% of gross domestic product, Finance Minister Heng Swee Keat said in a speech in Parliament Thursday. It also will widen the budget deficit for the fiscal year starting April 1 to 7.9% of GDP, from a previous target of 2.1%.

“This extraordinary situation calls for extraordinary measures,” Heng said. “We have saved up for a rainy day. The Covid-19 pandemic is already a mighty storm, and is still growing.”

The stimulus spending comes as governments around Asia, including India’s on Thursday, step up fiscal support with the pandemic forcing a global economic shutdown. It also comes just five weeks after Heng presented Singapore’s annual budget, which allocated S$6.4 bil for health care and support to businesses and households hurt by the outbreak.

Singapore’s outlook has deteriorated substantially since then, with the government earlier Thursday downgrading its growth projections for this year to a contraction of 1% to 4%. The Monetary Authority of Singapore has moved forward its biannual policy statement to Monday, when it is widely expected to ease policy to confront the crisis.

Even “a bazooka fiscal package” like Thursday’s – larger than the one Singapore enacted during the global financial crisis – “will help cushion the pain, but will not prevent a recession,” said Chua Hak Bin, senior economist at Maybank Kim Eng Research Pte in Singapore. “The fiscal support will reduce job losses and the extent of unemployment, but will not lift growth or corporate revenue.”

The Singapore dollar climbed as much as 0.7% to its session high against the US dollar, while the city-state’s benchmark equity gauge closed 0.7% lower after retracing earlier losses.

Past reserves

Singapore’s export-reliant economy is coming under strain as the virus disrupts supply chains and travel. Shutdowns in key trading partners, like Malaysia, have choked off labour and food supplies.

The government will draw as much as S$17 bil from past reserves to finance the stimulus. The last time it tapped its reserves was in 2009, when the economy faced a recession during the global financial crisis. At that time, it delivered a S$20.5 bil stimulus package, and drew down reserves by S$4.9 bil.

Under the constitution, the president must approve the use of reserves. In a statement to Parliament on Thursday, President Halimah Yacob said she supports the drawing down of past reserves under current conditions.

“We need to do our utmost to help our businesses and people quickly,” she said in the statement. “It is a matter of survival.”

Among other measures in the stimulus package are:

. Scrapping of property tax for virus-hit hotels, restaurants and shops
. Expansion of wage support for businesses, including extra support for those in food services, aviation and tourism industries
. Direct cash aid to a broader pool of self-employed persons, and enhanced support for lower-income workers
. Freeze of government fees and charges, and suspension of student-loan interest and repayment charges, for a year
. Suspension of late-payment charges on public-housing mortgage arrears for three months – March 26, Bloomberg

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