With the Singapore Budget 2020 concluded, most Singaporeans would probably be happily unpacking all the good news that comes along with the announcement.
Some of the major announcements of Budget 2020 include:
- GST will remain at 7% in 2021, but will increase by 2025. A $S$6 billion Assurance Package will help cushion the impact of the GST hike when it happens.
- A S$1.6 billion Care and Support Package will help Singaporeans defray household expenses. Under this package, Singaporeans aged 21 and above will receive one-off cash payout of $100, $200 or $300 in 2020.
- Enhance of Jobs Support Scheme and Wage Credit Scheme to support firms and workers stay employed as part of a larger S$4 billion Stabilisation and Support Package
- $500 SkillsFuture Credit top-up for every Singaporean aged 25 and above
- CPF payouts to increase by 20% for seniors under the Silver Support Scheme
With all of these measures announced, this year’s expansionary Budget is expected to run a historic deficit of $10.9 billion — the highest in 10 years.
The government will run a deficit when the expected expenditure of the government is more than its total revenue.
Here’s a look at the historical estimated budget position of the Singapore government in its current term:
|Initial estimates||Actual/revised figures|
|FY2016||S$3.45 billion||S$6.12 billion|
|FY2017||S$1.91 billion||S$10.86 billion|
|FY2018||-S$0.6 billion||S$2.12 billion (revised)|
|FY2019||-S$3.5 billion||-S$1.7 billion|
Table source: TODAY
According to the Singapore Constitution, the governing party which forms the government is required to maintain a balanced Budget over each term, typically in a 4- to 5 year-period.
Any Budget surplus or deficit cannot be carried over to the next term of government after each election.
However, the government can accumulate each budget surplus or deficit over its terms.
From 2016 to 2019, the total surpluses have reached almost S$20 billion, allowing the government to now use them to implement extraordinary measures such as in the current virus situation.
While it is projected that the current budget 2020 will run a historical deficit of S$10.9 billion, there is enough budget surplus in the current 5-year term, which allows the government to draw down from.
At the end of each government term, any unused surpluses are then transferred to the Singapore reserves. This is in turn protected by the Constitution.
The government can tap on past Singapore reserves, in times of extraordinary expenditure needs. However, this is only possible with the approval of Parliament and the President.
The actual size of the Singapore reserve is a government secret, although it is estimated by most analysts at well above S$500 billion.
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