The expenditure of the Singapore government is expected to increase to around 19% to 20% of the country’s gross domestic product (GDP) in the period between FY2026 to FY2030.
Spending is expected to possibly exceed 20% by FY2030, says the Ministry of Finance (MOF) in its occasional paper titled “Medium-Term Fiscal Projections”.
The paper looks at the fiscal implications of Singapore’s medium-term challenges and projects the government’s expenditure up till FY2030, explains MOF in its Feb 8 statement.
According to the paper, one of the main reasons behind the increase is government healthcare expenditure. “Besides healthcare, we also factored in the fiscal impact of spending moves that the government has already committed to, such as uplifting lower-wage workers and improving early childhood education,” reads the statement.
Singapore’s total revenue, which comprises operating revenue and net investment returns contribution, is now at around 18.5% of the country’s GDP, and would not be sufficient to cover the increase in the government’s spending over the coming years, explains MOF.
“That is why the tax changes announced in Budget 2022, including the Goods and Services Tax (GST) increase, were necessary to close the funding gap,” it says.
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The projections do not take into account future policy moves such as additional spending to strengthen our social compact and economic competitiveness. “If there are such further spending increases, we will need additional revenues to balance the budget in the medium term,” adds MOF.