Budget 2021: FY2021 Budget deficit to narrow to S$11.01b

FOLLOWING the extensive spending in FY2020 to support the ailing economy amid the Covid-19 crisis, a narrower budget deficit of S$11.01 billion is expected for FY2021.

The deficit amounts to 2.2 per cent of gross domestic product (GDP) and will be Singapore's third consecutive deficit as the government continues to offer support for economic recovery with a focus on preparing for the future.

Total spending by the ministries is projected at S$102.34 billion in FY2021, or 8.8 per cent more year-on-year; this comes mainly on the back of increased spending in social development, particularly in health care.

Health care spending will grow to S$18.84 billion, up 13.2 per cent from FY2020's revised estimate of S$16.65 billion, as the Ministry of Health looks to cater for the growth in patient subsidies with the opening of new facilities. The ministry is also anticipating a greater demand for health and aged care services as Singapore's population ages.

Spending by the Ministry of Transport will increase significantly to S$11.07 billion, up 37.8 per cent from S$8.03 billion a year ago. A bulk of expenditure will be set aside to fund Covid-19 relief measures, especially for the aviation sector as well as public transport concession schemes for lower-wage workers and persons with disabilities.

Meanwhile, the Ministry of Defence is also expected to raise its spending to S$15.36 billion, up 12.7 per cent from S$13.63 billion. A bulk of these funds will be allocated to pay for the purchase of military equipment and salaries of national servicemen. Higher construction cost is also expected for development works, including projects previously affected by Covid-19.

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Increased spending from these ministries will be partially offset by lower expenditure by the Ministry of Trade and Industry. Spending is projected to fall 27.7 per cent to S$7.18 billion from S$9.92 billion as the government reins in economic relief measures from the previous year.

The Ministry of National Development will register a 6.8 per cent drop in spending to S$5.53 billion, as lower expenditure is projected for Covid-19 related facilities and works.

Including top-ups to endowment and trust funds, special transfers will drop to S$4.86 billion from the revised estimates in FY2020 of S$53.59 billion.

Operating revenue for FY2021 is expected to hit S$76.64 billion, or an 18.6 per cent increase from FY2020's revised estimate of S$64.61 billion. This is mainly due to an increase in estimated collections from corporate income tax, other taxes, assets taxes and goods and services taxes, which were previously lower due to deferments, waivers and rebates.

Net investment returns contribution (NIRC) is projected to come in at S$19.56 billion, or 7.8 per cent higher than the revised figure for FY2020 of S$18.14 billion.

Excluding the government's top-ups to endowment and trust funds and NIRC, a basic deficit of S$30.57 billion is projected for FY2021.