BM0008: If the Covid-19 pandemic situation worsens, the Singapore Government may need to seek President Halimah Yacob’s consideration: Macroeconomics Case Study. NYP, Singapore

Learning Outcomes:-

• Understand key economic issues affecting a country, a society and
  businesses using the economic concepts they have acquired.
• Analyze the economic issues and trends based on a case study.
• Apply macroeconomic concepts in problem-solving initiatives.

Case Article

If the Covid-19 pandemic situation worsens, the Singapore Government may need to seek President Halimah Yacob’s consideration for a further draw on past reserves to continue funding investments that would enable Singapore’s GDP to emerge stronger in the midst of unprecedented health and economic crisis.

In such a situation, Singapore should then think hard about how to ensure it can, over time, build back its reserves drawn for this purpose, said Deputy Prime Minister and Finance Minister Heng Swee Keat on 24 Feb 2021.

Singapore expects to draw $42.7 billion of past reserves for the last financial year. With the Government obtaining Madam Halimah’s in-principle support to utilize up to $11 billion in FY2021, it is expected to draw up to $53.7 billion from the reserves since the onset of the coronavirus pandemic.

In a Facebook post published as MPs began debate on Budget 2021 in Parliament, Mr. Heng acknowledged that drawing on past reserves for the second year in a row was a “difficult” decision. Mr. Heng added: “We have benefited during this crisis from the prudence and long-term orientation of previous generations. We owe it to future generations to exercise this prudence and ensure they can deal with future crises.”

If Singapore’s business cycle continues to be recessionary with high unemployment rates and subdued trade figures, the government should roll out fiscal and monetary policies to enable the economy to emerge stronger for the longer term. “

“Countries must also work together to improve cross-border digital integration by negotiating economic agreements in forward-looking areas such as data, finance, and technology. Those who believe that economic integration is key for global recovery must work together to counter trade protectionism,” Trade and Industry Minister Chan Chun Sing said on 26 Feb 2021.

Mr. Chan said Singapore is also doubling down on efforts to reinforce its position as a global business hub. “We believe there is still a role for trusted hubs where businesses can aggregate talent, mobilize capital and protect intellectual property,” he said.

To reinforce its position as a business hub, Singapore is working closely with like-minded international partners to improve physical and digital connectivity. Examples of such efforts include Digital Economy Agreements signed with Australia, Chile, and New Zealand, as well as agreements to improve access to trade financing, such as the one signed with the US last December, he said.