Singapore Budget 2009: Savings Reserves To Be Used

Singapore Budget 2009: Savings Reserves To Be Used

I have highlighted some issues why Singapore Savings Account readers might be interested in the Singapore Budget 2009. Now that the Singapore Budget 2009 has been released, let us see if our questions have been answered.

In delivering the Singapore Budget 2009 on 22 January 2009, Singapore's Finance Minister, Mr Tharman Shanmugaratnam, revealed that Singapore will dip into its reserve savings for the first time ever since independence to fund a S$20.5 billion dollar Resilience Package, creating a budget deficit of 6.0% GDP in the process.

What this means is that the Singapore Government will use its savings reserves from its own savings account (accumulated during good times) to help create jobs, cushion the impact of Singapore's worst recession and to build a home for the future.

Singapore's President has given his in-principle approval for withdrawal of $4.9 billion from past savings reserves. The President’s assent to the Supply Bill will be obtained after Parliament has passed the Bill.

This is also the first time that the government has sought the President's approval for such action since the Constitutional framework for protection of reserves was set up in 1991.

Our Finance Minister also made it clear that more off Budget measures may be activated (?? possibly more withdrawal from the savings of our reserves) should the recession worsen.

In the Singapore Budget 2009, the CPF rates remain unchanged. Instead a Jobs Credit has been created (in the form of a cash grant amounting to 12% of the first $2,500 of the each employee's wages) to pay companies who retain their staff on their payroll.

Bank savings account interest rates are unlikely to change much with the release of Budget 2009. The good news is that our Finance Minister thinks that inflation will come down to zero in 2009. So our paltry interest payments received from bank savings accounts in 2009 may actually beat inflation for once!

As to whether bank savings deposits guarantees will still be around after the end of 2010, it will depend on the state of the economy near that point in time. By the decisive and responsive measures taken by our Finance Minister, we can be assured that the decision making will be appropriate and sound.

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