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09 Apr 2020
Economic downturn
Suggestion View - 232
Loan relief scheme to cover loss of income

Most countries prefer to give financial assistance to the unemployed as a benefit.

They face the difficulty of managing the abuse.

I prefer to give them a loan to cover the loss of income. They have to repay the loan in the future, with a modest rate of interest. This will tide them over a period of unemployment, but may be capped for 6 to 12 months.

As this is a loan that needs to be paid back, the abuse is reduced somewhat, but not totally.

In the future, a part of the distress loan can be written off or forgiven, but that can be done at a later date, subject to evaluation.

In the case of Singapore, the loan can be charged against the CPF savings or against a property bought with CPF funds.

This loan facility will be available to all workers, regardless of income level. They are available to the higher income workers as well.

The loans can also be extended to the self employed, including professionals, who suffer a loss of income during an economic downturn. The loss of income can be capped at a level that is appropriate to the occupation or trade.

If all income earners have access to a loan to cover the loss of income, there is no need to extend other types of assistance, such as grants to cover utility, rental, mortgage payments and loan repayments. Life can continue as before. There will be minimal need to monitor against abuses in these other relief schemes.

Tan Kin Lian
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