Generous handouts to the Merdeka Generation and more restrictions on the inflow of foreign workers are bound to be popular with voters. But there is a sound economic case for all the measures in Budget 2019.

SINGAPORE (Feb 25): Finance Minister Heng Swee Keat insisted this past week that national budgets formulated by the Singapore government have nothing to do with election cycles. “I don’t plan on that basis,” he said, in answer to a question during an interview on TV.

The current government term expires in January 2021, but some market watchers expect elections to be called as early as this year. One reason is that Prime Minister Lee Hsien Loong announced in his National Day Rally speech earlier this year plans for the so-called Merdeka Generation Package, which aims to assist Singaporeans born in the 1950s with their medical bills. In addition, the hike in the Goods and Services Tax from 7% to 9%, which was announced at Budget 2018, is expected to happen between 2021 and 2025. An election well before 2021 could go some way in neutralising the potential for that impending tax hike to become a contentious issue.

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