Singapore Sees Another Year of Budget Gap as Inflation Bites

  • Singapore is planning yet another year of a slim budget deficit, emphasizing how it will fund protection for the most vulnerable households and businesses against persistent inflation.
  • The city-state aims to narrow the shortfall to 0.1% of gross domestic product in the year starting April from a revised 0.3% gap in 2023. It will do so by boosting revenue by 7.1%, including raising taxes on high-value property transactions, and lowering expenditure by 2.6%.
  • The SGD104bn (USD78.4bn) spending plan is meant to nudge residents further into a post-Covid reality, while seeking to blunt near-term cost-of-living pressures.
  • Headline inflation that’s still seen running hot at 6.5% is complicating policy as the trade-reliant Singapore also stares down a gloomy global growth outlook.
  • In order to help Singaporeans absorb higher costs, Deputy Prime Minister Lawrence Wong said the government would increase subsidies by SGD3bn to lower-income households to defray the higher goods-and-services tax, as well as inflation. Wong said he expects price-growth to remain high at least through the first-half of the year.
  • Singapore also intends to raise its effective tax rate for multinational enterprises to 15% from 2025, in line with the so-called BEPS 2.0 global agreement to increase the floor rate.

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