• FY2023 fiscal deficit widened to S$3.6 billion from earlier estimate of S$0.4 billion, with S$7.5 billion Majulah Package

• Primary deficit narrowed as higher-than-expected operating revenue more than offset higher spending

SINGAPORE’S fiscal deficit for FY2023 has been revised to S$3.6 billion, widening sharply from the earlier S$0.4 billion estimate – partly due to the S$7.5 billion Majulah Package announced in last year’s National Day Rally.

The revised deficit represents some 0.5 per cent of gross domestic product.

This was even as the primary deficit narrowed, as higher-than-expected operating revenue more than made up for higher spending.

Meanwhile, FY2022’s final tally swung from an expected deficit of S$2 billion to a surplus of S$1.7 billion. 

For FY2023, total operating revenue was revised to S$104.3 billion, 7.9 per cent higher than the earlier estimate of S$96.7 billion. This was also up 14.6 per cent from FY2022’s actual operating revenue of S$91 billion.

In his Budget speech on Friday (Feb 16), Finance Minister Lawrence Wong said: “The additional revenue will allow us to pay for new spending, including the S$7.5 billion injection to the Majulah Package fund.”

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The better-than-expected revenue performance in FY2023 was led by corporate income tax, with S$28.4 billion collected, higher than the S$24.3 billion estimate.

Personal income tax collection also exceeded expectations at S$17.5 billion, compared with an estimate of S$16.8 billion.

Other contributors included vehicle quota premiums (S$4.7 billion, revised from S$3.9 billion) and other taxes (S$8.8 billion, revised from S$6.6 billion) including the foreign worker levy, water conservation tax, land betterment charge and annual tonnage tax.

In contrast, goods and services tax collection fell short of the estimated S$17.4 billion at S$16.4 billion. The Ministry of Finance (MOF) attributed this to weaker imports.

The increased revenue more than offset the S$2.8 billion, or 2.6 per cent, upward revision of total expenditure to S$106.9 billion. This was also 1.9 per cent higher than FY2022’s actual expenditure of S$104.9 billion.

Contributing the most to higher-than-expected spending were the Ministry of Defence (S$19.8 billion, from S$18 billion) and Ministry of Health (S$17.9 billion, from S$16.9 billion).

MOF said that operating expenditure was higher than anticipated because of the resumption of projects deferred due to Covid-19, as well as funding for public healthcare.

Development expenditure was also higher than expected due to increased spending on areas such as transport and economic development.

Special transfers were largely unchanged at S$2.8 billion. This was despite September’s S$1.1 billion Cost-of-Living Support Package, with higher spending needs partially offset by savings from existing schemes. 

With these revisions, the basic deficit narrowed from earlier estimates. But the overall budget deficit widened due to higher top-ups to endowment and trust funds – chiefly the fund for the Majulah Package.

This brought total top-ups to S$24.3 billion, up from an estimated S$16.8 billion.

The Majulah Package will provide Central Provident Fund bonuses to lower- and middle-income Singaporeans born in 1973 or earlier. 

The net investment returns contribution also came in S$0.6 billion lower than expected. 

All this brought the revised overall budget balance to S$6.8 billion, widening from the S$3.6 billion first estimated.

Finally, the revised overall fiscal deficit of S$3.6 billion takes into account S$3.5 billion in capitalisation of significant infrastructure, less related interest costs and loan expenses. 

Meanwhile, FY2022’s fiscal surplus was due to both higher actual operating revenue – S$91 billion, up S$0.7 billion – and lower total expenditure of S$104.9 billion, down S$2 billion from the previous estimate.