Budget 2025: Singapore primed to navigate troubled world with confidence

THERE may be global uncertainties on the horizon, but Singapore can look ahead with a degree of confidence – thanks to both its position of strength, and support from Budget 2025.

Finance Minister Lawrence Wong has called his first Budget as prime minister “a Budget for all Singaporeans”.

Living up to that claim is no easy feat, but few Singaporeans will find themselves left out of a generous Budget that celebrates SG60 and tackles cost-of-living anxieties.

Aside from a bumper crop of vouchers and rebates – including a one-off SG60 package – for all Singaporeans regardless of income or dwelling, the government is doling out more to specific groups, from mid-career workers to seniors and large families.

The vulnerable segments of society are not forgotten, including caregivers, former offenders and persons with disabilities.

Given the breadth of support, Budget 2025 seems like a typical “election Budget”. It is, after all, literally the last one before the next general election is called by November.

Observers see an “election Budget” as characterised by its “feel-good factor” and the presence of more carrots than sticks. Budget 2025 would tick those boxes, especially considering the absence of major tax hikes.

Yet, simply relegating Budget 2025 to that immediate role might not do justice to its longer-term concerns.

For instance, even while handing out help for short-term costs, PM Wong noted that the longer-term strategy against higher prices is pursuing economic growth.

In its next stage of development, Singapore has to differentiate itself by producing “high-value solutions for the world”, he said. This calls for billion-dollar investments not just in innovation and technology, but supporting high-growth local enterprises.

At the same time, the government is pouring funds into developing the Republic’s air hub and future energy resiliency – investments that will take years to pay off.

Some investments, such as the S$5 billion top-up for the Coastal and Flood Protection Fund, may even span decades.

In any case, it can be tricky to separate election largesse and celebratory generosity.

Ten years ago, there was another coincidence of politics and partying: Budget 2015, which took place when Singapore celebrated its 50th year of independence, was widely seen as a crowd pleaser, with its Jubilee Year bonuses, and preceded the general election that September.

Still prudent

Budget 2025, however, has one marked difference from Budget 2015.

For FY2015, the government projected a S$6.7 billion deficit. What is remarkable about Budget 2025 is that its generosity is not expected to result in a deficit.

Instead, the government is anticipating an overall surplus of S$6.8 billion, or 0.9 per cent of gross domestic product.

Furthermore, FY2024 is expected to end with a surplus of S$6.4 billion, up from an estimated surplus of just S$0.8 billion.

This is as revenue collections in FY2024 came in better than expected, with corporate income tax revenue increasing significantly in the last two years, said PM Wong.

Singapore rebounded strongly from the Covid-19 pandemic and ended last year “on a strong footing”.

The prime minister’s hopeful tone strikes a sharp contrast to his Budget speech two years ago. Then, he said Singapore’s “tight fiscal position” makes it “highly unlikely” for the government to return what it had drawn from the national reserves to pay for pandemic support measures.

With Singapore’s fiscal position now looking more comfortable, the question is whether the government should prioritise returning funds to the reserves over bonus payouts. After all, the government has often espoused the importance of the reserves in helping Singapore tide over rainy days.

Yet, given the dark clouds of geopolitical and economic uncertainty ahead, one could say that rainy days – storms, even – are imminent, and Budget 2025 measures will be crucial in keeping Singaporeans dry.

For more Budget stories, visit businesstimes.com.sg/singapore-budget-2025