Singapore budget likely to include outlays to counterbalance economic uncertainties
Singapore Deputy Prime Minister and Minister for Finance Heng Swee Keat will unveil the country’s annual budget in parliament today.
The budget is likely to introduce large fiscal spending to boost the decreased growth rate range of semiconductors—0.5% to 1.5% in 2020. Semiconductors are Singapore’s leading export but the US-China trade war has led to a global slump in demand. The coronavirus outbreak further aggravated this downturn by slowing the country’s tourism and transport sectors. It is expected that the government will spend $50 million to cover the loss of business activity and worker incomes associated with the virus.
Economists in the government have indicated a fiscal deficit of approximately $5 billion. This deficit is fiscally sustainable given a government surplus of $12.23 billion that has accumulated over the past five-year term.
Singapore will hold its 18th general election this year; the budget is thus expected to double as a populist document. While opposition regarding a planned increase in Goods and Services Tax from 7% to 9% in the coming term is likely, the government may put forth cash handouts or tax rebates to aid consumption in the country. It may also support efforts to increase business productivity to boost activity after the slump.
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