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BUDGET 2017: FISCAL PRUDENCE

Budget surplus for FY16 revised upwards due to slower spending

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Operating revenue for the year is now expected to come to S$68.67 billion, on higher contributions from vehicle quota premiums, stamp duty, personal income tax and GST.

Singapore

SINGAPORE'S budget surplus for FY16 is expected to clock S$5.18 billion, some 50 per cent higher than the previous estimate of S$3.45 billion, due to slower-than-expected expenditure growth.

At S$5.18 billion, the higher Budget surplus for the fiscal year which ends March 31 translates to 1.3 per cent of GDP. (In contrast, FY15 ran a budget deficit of S$4.05 billion)

But excluding the government's top-ups to endowment and trust funds and net investment returns contribution (NIRC) from past reserves, this would have worked out to a basic deficit of S$5.6 billion for FY16.

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"FY16 was hence an expansionary budget," said Finance Minister Heng Swee Keat in his Budget Speech.

Operating revenue for the year is now expected to come to S$68.67 billion, slightly higher than the S$68.44 billion expected previously. This came on the back of higher contributions from vehicle quota premiums, stamp duty, personal income tax and GST; areas where revenue was lower than expected included statutory board contributions and motor vehicle taxes.

For instance, revenue from vehicle quota premiums was revised higher to S$6.9 billion, versus an expected S$5.7 billion. Meanwhile, stamp duty is expected to come in at S$2.9 billion, representing an upward revision of S$0.4 billion.

Total expenditure was revised downwards from an estimated S$73.43 billion previously to S$71.39 billion as there was a reduction in spending on healthcare and housing, which was partly due to the timing of the projects.

Spending on healthcare is now expected to work out to S$9.8 billion, compared to S$11 billion previously, while expenditure on housing is slated to come in at S$3.5 billion, versus S$3.8 billion.

In FY15, total operating revenue came to S$64.82 billion and total expenditure, S$67.45 billion.

Special transfers (excluding top-ups to endowment and trust funds) is expected to hit S$2.87 billion in FY16, which is higher than the S$2.67 billion projected, while top-ups to endowments and trust funds was unchanged at S$3.6 billion.

Under special transfers, the rise came from higher spending on the Productivity and Innovation Credit (PIC) scheme and the temporary employment credit scheme.

The PIC scheme is expected to cost S$0.98 billion in transfers as opposed to an estimated S$0.66 billion; meanwhile, the temporary employment credit is likely to come in at S$0.78 billion, up from S$0.73 billion.

Finally, NIRC worked out to S$14.37 billion for FY16, slightly lower than the S$14.70 billion previously estimated. This is higher than the S$8.94 billion in FY15, as NIRC started incorporating contributions from Temasek Holdings from FY16.

HIGHLIGHTS

  • Bigger than expected budget surplus for FY16
  • Total expenditure to be revised downwards from earlier estimate
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