Budget 2023: Government will not draw from past reserves for FY23 Covid-19 expenditures

THE Singapore government will not tap past reserves to pay for Covid-19 public health expenditures in FY2023. Instead, it will fund further Covid-19 public health expenditures from its revenues.

This comes as Singapore’s Covid-19 situation stabilises and the nation moves towards an endemic Covid-19, the Ministry of Finance (MOF) said on Tuesday (Feb 14).

MOF expects to draw S$3.1 billion from past reserves for Covid-19 public health expenditure, lower than the S$6 billion initially expected.

This brings the total draw on past reserves from FY2020-FY2022 to S$40 billion, lower than the S$52 billion initially expected.

In FY2020, the government utilised S$31.9 billion from past reserves for Covid-19 response measures. It spent S$11.3 billion in FY2021 on the Covid-19 Resilience Package, of which S$5 billion was from past reserves.

“It reflects our prudent approach in using our reserves – drawing on them judiciously, only when there are compelling reasons to do so,” Finance Minister Lawrence Wong said in his Budget speech in Parliament.

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Looking ahead, the Singapore government expects a slight deficit of S$2 billion or 0.3 per cent of gross domestic product for FY2022. The estimate takes into account revenue upside with the government’s higher spending.

“Our economy has recovered back to pre-Covid levels. But we continue to be in a tight fiscal position. It is therefore highly unlikely that we will be able to put back what we have drawn from Past Reserves,” Wong noted.