SINGAPORE, Feb 5 - Singapore's finance minister said on Thursday the economic downturn was worsening and the government may have to tap its multi-billion dollar pool of reserves for another fiscal stimulus package next year.
Singapore was the first country in Asia to fall into recession last year and Finance Minister Tharman Shanmugaratnam reiterated a forecast made before the country's January stimulus package that the economy could shrink up to 5 percent this year.
"We are seeing continued momentum in the decline week by week," Tharman told parliament at a budget debate.
Singapore, a tiny city-state of 4.6 million, last month took the unprecedented step of drawing on its reserves to help finance a S$20.5 billion stimulus package as its economy shrunk for the third straight quarter. [ID:nSP404398].
Tharman said the stimulus package was sufficient. It will result in a budget deficit of about 6 percent of gross domestic product for 2009/2010 before investment income and the top-up from reserves.
"There is a possibility the government may have to go back to the president and the CPA in a year's time to seek a further draw," Shanmugaratnam said, referring to the Council of Presidential Advisers. Singapore's president, whose role is otherwise largely ceremonial, is the formal guardian of the reserves.
A senior politician said on Sunday the government would dip into the reserves only in times of crisis and to pay for welfare.
"As a general principle, the government must continue to fund such programmes out of revenues raised in the current term of government, not past reserves," former Prime Minister Goh Chok Tong said
Singapore's two sovereign funds, Temasek [TEM.UL] and the Government of Singapore Investment Corp, or GIC, together manage an estimated $400 billion in assets. (Reporting by Kevin Lim; Writing by Nopporn Wong-Anan; Editing by Jan Dahinten)