Singapore budget deficit could give others cover, says Malaysia

Singapore is expected to announce its first budget deficit in more than 10 years today. (AFP pic)

SINGAPORE: With Singapore expected to announce a rare budget deficit as it responds to coronavirus-related concerns, financial markets are likely to be more lenient on other countries in the region veering away from fiscal targets, according to Malaysia’s deputy trade minister.

“In a context where a lot of countries in the region are announcing stimulus packages, and Singapore will probably have its first budget deficit since the crisis, the first time in over 10 years, I think the market would be more willing to accept any deviations in the expected budget deficit,” Ong Kian Ming said in an interview in Singapore yesterday.

“It could make markets less twitchy about possible changes in any deficit targets experienced by other countries in the region,” he said, noting that Singapore could be the start of several economies making similar announcements as they try to counter the impact of the Covid-19 outbreak.

Singapore is set to unveil a “strong” package of measures in its budget today to respond to the virus outbreak. Economists in a Bloomberg survey predict a fiscal deficit of 0.3% of gross domestic product in the year through March, and a shortfall of 1.5% in the coming year.

Ong declined to offer any details on the size of Malaysia’s own virus-related stimulus package, planned for unveiling on Feb 27. Malaysia has already widened its deficit target for fiscal 2020 to 3.2% of GDP from 3%.