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Singapore Budget 2019: Budget deficit of S$3.48b expected for FY19
A LARGER budget deficit of S$3.48 billion is expected for FY19, with expenditure predicted to increase, Minister for Finance Heng Swee Keat announced on Monday.
The deficit, which amounts to 0.7 per cent of GDP, is the biggest since 2015, when it was S$4.05 billion. However, economists told The Business Times that the spending is well within the government's means, as it has accumulated a surplus of S$17.9 billion over the past three financial years.
Total spending by the ministries is projected at S$80.25 billion in FY19, or 1.6 per cent more year-on-year, mainly on the back of increased spending in the healthcare, defence and environment and water resources ministries.
For instance, healthcare spending will grow to S$11.7 billion from S$10.6 billion, as the Ministry of Health plans to increase patient subsidies while expanding clinical services and capacity and enhancing healthcare quality. The ministry's development expenditure is also expected to increase on the back of major infrastructure projects such as the Woodlands Health Campus, as well as major IT projects.
Spending by the Ministry of Defence is expected to increase 4.8 per cent to S$15.47 billion on higher military expenditure.
"Given its strategic significance, the government will continue to invest a significant share of our resources - about 30 per cent of our total expenditure this year - to support our defence, security and diplomacy efforts," said Mr Heng.
"This spending is significant, but indispensable. We will invest more, if the need arises, to protect the sovereignty of Singapore and the well-being of Singaporeans."
Increased spending from these ministries will be offset by decreased expenditure from the Ministry of Transport, which will fall to S$10.68 billion from S$11.75 billion. This is partly due to the suspension of the Kuala Lumpur-Singapore high-speed rail project. In addition, sufficient funds have been set aside for the Johor Bahru-Singapore Rapid Transit System link project.
These decreases will be partly offset by increased spending to enhance public transport capacity and resilience.
Special transfers including top-ups to endowment and trust funds will more than double to S$15.3 billion from revised estimates of S$9 billion in FY18. The increase largely stems from the setting up of two new funds, the Merdeka Generation Fund of S$6.1 billion and the Long-Term Care Support Fund of S$5.08 billion.
The Merdeka Generation Package will draw on its designated fund to benefit close to 500,000 Singaporeans born in the 1950s and who obtained citizenship by 1996. The key benefits include annual MediSave top-ups over five years, additional outpatient care and MediShield Life premium subsidies for life, and additional participation incentives for Merdeka Generation seniors who join CareShield Life.
Excluding top-ups to endowment and trust funds, special transfers will rise to S$1.74 billion in FY19, from revised estimates of S$1.7 billion in FY18. They include components of a S$1.1 billion Bicentennial Bonus, under which the government will dole out S$150 to S$300 to about 1.4 million lower-income Singaporeans aged 21 and above this year. The Bonus also includes top-ups to Edusave and Post-Secondary Education Accounts, and CPF top-ups of up to S$1,000 for Singaporeans aged 50 to 64 this year who have less than S$60,000 of retirement savings in their CPF accounts.
Operating revenue for FY19 is expected to hit S$74.9 billion, or a 1.7 per cent increase from the revised estimate for FY18. Higher revenues are expected from corporate income tax and goods and services tax, but they will be partially offset by expected decreases in stamp duty collections and statutory board contributions.
Net investment returns contribution (NIRC) is projected to come in at S$17.17 billion, or 4.5 per cent higher than the revised figure for FY18. Excluding the government's top-ups to endowment and trust funds and NIRC, a basic deficit of S$7.09 billion or 1.4 per cent of GDP is expected for FY19.
For all of our Singapore Budget 2019 coverage, news, analysis, and infographics visit bt.sg/budget19