SINGAPORE – The Government will continue to monitor inflation closely and is prepared to do more if the economic situation worsens significantly, Deputy Prime Minister Lawrence Wong said in Parliament on Monday (July 4).
The $6.6 billion Assurance Package, which aims to cushion households from the impact of the looming goods and services tax (GST) increase, still holds as it was designed with a buffer in case of higher inflation, he said.
“We will continue to assess the adequacy of the Assurance Package as the inflationary outlook evolves.
“If need be, we will further enhance the Assurance Package to uphold the commitment,” said Mr Wong, who is also Finance Minister.
He was responding to questions from eight MPs on the adequacy of government support measures for Singaporean households amid inflationary pressures.
Mr Yip Hon Weng (Yio Chu Kang) asked whether the Government will consider postponing the GST hike and introducing additional subsidies to help households and businesses struggling with rising inflation, while Ms Foo Mee Har (West Coast GRC) asked what indicators were used to determine the $1.5 billion support package and whether the Government will consider temporarily enhancing the GST offset package for the lower- and middle-income groups if inflationary pressures continue.
Ms Jessica Tan (East Coast GRC), Mr Liang Eng Hwa (Bukit Panjang), Mr Saktiandi Supaat (Bishan-Toa Payoh GRC), Ms Mariam Jaafar (Sembawang GRC), Mr Melvin Yong (Radin Mas) and Mr Alex Yam (Marsiling-Yew Tee GRC) also raised issues ranging from food inflation to how the Government will mitigate the risk of stagflation, where growth is dragged by inflation.
Mr Wong said the Assurance Package – first announced by Deputy Prime Minister and then Finance Minister Heng Swee Keat in 2020 – and a further $1.5 billion package announced last month are examples of how Singapore is monitoring global and domestic developments carefully and ensuring that support measures are adequate.
“You have my word – if the situation worsens significantly, we will be prepared to do more, especially to provide targeted help for the lower-income groups.
“We will continue to do so while living within our means and upholding prudence and responsibility in fiscal management,” he said.
Mr Wong said Singapore must ensure it has sufficient resources to tackle its longer-term challenges and do so in a fiscally responsible and sustainable manner.
This is why the Government will need to go ahead with the GST increase as announced in Budget 2022, he said, adding that it had already anticipated the higher inflation outlook earlier this year.
“Hence, instead of a 2 percentage point increase this year, I had decided to delay and stagger the GST increase over two steps, by 1 percentage point from January 2023 and 1 percentage point from January 2024,” he said.