Keeping Singapore economy sustainable: New options in offing
With the need to raise revenue having been signalled over the past months, a discussion of taxes is widely expected to dominate Finance Minister Heng Swee Keat's Budget speech come Monday.
Singapore, one of the fastest-ageing countries in the world, will have one in five people aged 65 and older by 2030. Social and healthcare spending are set to rise. Security spending will also go up to keep Singapore safe and secure, Mr Heng had said earlier. To be sure, Singapore has been growing, with 2017 GDP growth clocking in at a healthy 3.6 per cent amidst a robust global economy. But even that fairly good rate cannot keep pace with expenditure growth.
A closer look at the Budget spending shows that it has exceeded operating revenues since the 2015 financial year. The Budget went into surplus largely due to the contributions from the returns on reserves. The reserves are managed by three investment entities: the Monetary Authority of Singapore, GIC and Temasek Holdings. The government, using the net investment returns (NIR) framework, may spend up to half of the long-term expected real returns from the assets managed by the three entities.
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