Design, reporting, and broader impact: COVID-19 budgeting in Singapore

Abstract

As governments undertake extraordinary policy measures in response to the COVID-19 pandemic, prevailing institutional factors can potentially compromise implementation success and subsequent outcomes. This paper illustrates this issue by examining Singapore’s budgetary response to COVID-19. The analysis reveals the fiscal response of the Singapore government to be a near-exemplification of crisis budgeting which, at the same time, entails a considerable drawdown from the country’s national reserves to finance the forecasted budget deficit. However, a revision of the budget balances vis-à-vis international reporting standards finds that: (i) the budget deficit is substantially smaller; and (ii) the influence of the fiscal injections on the economy – the multiplier effect – is likely smaller than what official estimates imply. The primary emphasis here is that policymakers need to be conscious of the contemporaneous influence of prevailing institutional factors on policy effectiveness. This takes on greater significance for effective crisis-management and recovery amidst the continued uncertainty about COVID-19 and developments in international trade and resource flows in the medium-term.