Singapore’s fiscal deficit for the ongoing FY2021 ending in March is expected to hit $5 billion or 0.9% of Gross Domestic Product (GDP).
The figure has been revised down from the $11 billion deficit expected previously, and is much smaller than the record $51.6 billion deficit registered in FY2020, estimates from the Ministry of Finance (MOF) show.
The lower figure for FY2021 follows lower total expenditure and higher operating revenue. For reference, the total revised expenditure for FY2021 is $98.4 billion, down from the $102.3 billion expected previously.
In this time, operating revenue is anticipated to be $80.4 billion, up from the previous prediction of $76.6 billion.
Higher than anticipated stamp duty – which is penciled to come in at $2.2 billion higher at $6.5 billion – was a key contributor to the rise. This follows higher than expected demand in the property market.
Meanwhile, personal income tax is expected to rise by $1.4 billion from the previous estimate to $13.8 billion following higher-than-expected wage growth.
Similarly, revenue from vehicle quota premiums is expected to come in $0.9 billion higher at $3.2 billion, due to higher-than-expected Certificate of Entitlement (COE) prices.
In terms of expenditure by ministry – the Ministry of Health was the biggest spender at $18.4 billion. The Ministry of Defence followed suit with a spending of $15.4 billion, while that for the Ministry of Education is expected to be $13.2 billion.
The provision of pandemic-related support, especially during the Heightened Alert phases saw specifical transfers coming in at $7.9 billion. This is considerably higher than the $4.9 billion estimated previously.
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The special transfers category captures payouts made under the Job Support Scheme ($4.6 billion in transfers), Rental Scheme ($.15 billion) which were previously not budgeted for.
FY2021 is also expected to see net investment returns contribution (NIRC) of $20.3 billion This is higher than the previous estimate of $19.6 billion as well as the $18.2 billion seen in FY2020.
Excluding the government’s top ups to endowment and trust funds and NIRC, the basic deficit for FY2021 is expected to be $25.9 billion.
FY2022: third year of running fiscal deficit
Singapore is expected to run a fiscal deficit for the third consecutive year in FY2022. Estimates put the deficit at $3.04 billion, or about 0.5% of GDP.
“For FY2022, our budget remains expansionary to support the economy,” Finance Minister Lawrence Wong said at his inaugural Budget speech in Parliament on Feb 18.
The deficit comes despite a rise in operating revenue and follows a rise in spending from pandemic-related support doled out to businesses, households as well as the healthcare sector.
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Estimates from MOF put total expenditure for FY2022 at $102.4 billion, a 4.1% or $4 billion rise from the revised figured of $98.4 billion penciled for the ongoing FY2021 ending in March.
In this time, operating expenditure for FY2022 is expected to increase by 4.3% to $85.1 billion, while development expenditure is forecast to edge up by 2.8% to $17.4 billion.
Accounting for 48.1% of total expenditure in FY2022, a substantial amount of spending is expected to go towards the social development sector. The amount is projected to rise by 0.9% from FY2021 to $49.2 billion.
The bulk of the expenditure for this sector is expected to be from healthcare, which will have a 4.7% rise in spending to $19.3 billion.
Spending for security and external relations is expected to edge up by 5% to $25 billion, while that for economic development is set to grow by 10.4% to $24.6 billion, on the back of a 40% rise in manpower spending to $7.1 billion.
Similarly, expenditure for government administration is projected to rise by 1.8% to $3.6 billion.
Meanwhile, operating revenue is expected to come in at $81.8 billion or 1.7% higher than the revised figure for FY2021. This follows projections of higher collections from Goods and Services Taxes (GST), vehicle quota premiums and corporate income tax.
However, the extent of the rise will be mitigated by lower stamp duty collections.
NIRC for FY2022 is estimated to be $21.6 billion or 6% higher than the S$20.3 billion pencilled for FY2021.
Excluding government's top-ups to endowment and trust funds, interest costs and loan expenses, capitalisation of nationally significant infrastructure and NIRC, a basic deficit of $22.8 billion is projected for FY2022, smaller than the $25.9 billion seen in FY2021.
Cover image: Bloomberg
