Budget 2021: Record deficit of S$64.9b for FY2020

SINGAPORE is expected to register a record budget deficit of S$64.90 billion for FY2020, equal to 13.9 per cent of gross domestic product (GDP).

This marks the largest budget deficit since the country became independent in 1965, driven by lower revenues due to the dampened economic backdrop and significant spending to contain the Covid-19 pandemic.

The deficit is significantly deeper than the projection of S$10.95 billion a year ago, before the Covid-19 crisis fully unfolded, but lower than the S$74.3 billion deficit estimated by the Ministry of Finance last October.

Multiple Covid-19 rescue measures were rolled out across five Budgets in 2020 - with a portion financed by past reserves - to provide economic support, social support and to fund public-health measures amid the pandemic.

The revised estimated total expenditure for FY2020 is S$94.06 billion, higher than the S$83.61 billion previously anticipated. This is in part due to higher-than-expected health care, trade and industry and manpower spending.

The revised FY2020 expenditure by the Ministry of Trade and Industry stood at S$9.92 billion, over two times more than the initial estimate a year ago. This was attributed to higher expenditure for Covid-19 related initiatives not budgeted for previously, as well as higher projected requirements to support enterprises hit by the pandemic.

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Meanwhile, the Ministry of Health estimated that it spent S$16.65 billion in FY2020, more than the S$13.41 billion it was previously expected to spend. This was mainly due to funding towards the mitigation of the Covid-19 crisis and efforts to support public healthcare facilities to meet the growing demand for healthcare services.

The Ministry of Manpower also recorded a higher-than-projected expenditure - S$6.76 billion, compared with the S$1.03 billion expected a year ago due to inflows towards Covid-19 support measures.

Revised total operating revenue for FY2020 stood at S$64.61 billion, down 15 per cent from the estimated S$76.01 billion. This decrease was the result of deferments, waivers and rebates provided for corporate income taxes, other taxes and assets taxes to support the economy during the pandemic.

Special transfers including top-ups to endowment and trust funds will come to $53.59 billion, significantly higher than the S$21.98 billion estimated previously, attributable to funding towards Covid-19 support measures as the pandemic took a toll on the economy. The Job Support Scheme, for instance, made up the bulk of special transfers at S$26.88 billion, given the government's focus on preserving livelihoods.

Net investment returns contribution (NIRC) is expected to be at S$18.14 billion, slightly lower than the S$18.63 billion initially projected.

Excluding the government's top-ups to endowment and trust funds and NIRC, it would work out to a basic deficit of S$65.72 billion.