Singapore tables 2024 budget with small surplus

SINGAPORE: Singapore is budgeting for a “small surplus” of S$0.8 billion (S$1=RM3.55) for the financial year 2024, or 0.1 per cent of the country’s gross domestic product (GDP), which is essentially a balanced fiscal position, said Deputy Prime Minister and Finance Minister Lawrence Wong.

“The overall stance is appropriate, as we are providing targeted support for households and businesses, even as the economy is projected to operate at around potential,” he said when delivering the 2024 Budget Statement today in Parliament.

According to an annex released to the media, the operating revenue for 2024 is estimated at S$108.64 billion.

The estimated total expenditure is S$111.76 billion, made up of operating expenditure of S$88.43 billion and development expenditure of S$23.33 billion.

For the financial year 2023, Wong said the country’s revenue collections were better than expected, mainly due to higher corporate income tax collections.

“Accounting for both our revenue upside and higher spending, we expect to end the financial year 2023 with a deficit of S$3.6 billion, or 0.5 per cent of GDP,” he said.

For 2024, Wong said the outlook is mixed.

“Growth in the major economies is expected to be resilient. But geopolitical risks continue to loom large. Wars are raging in Europe and the Middle East.

“These conflicts can escalate dangerously, leading to disruptions in global energy markets and supply chains,” he warned.

Fortunately, Wong said there are some upsides.

“Global inflationary pressures are expected to recede further. This provides some room for the major central banks to adopt more accommodative stances, which may ease financial conditions and support demand.

“The global electronics industry is projected to recover. This will bolster the growth of many regional economies, including our key trading partners,” he added.

Wong said Asia continues to be a key driver of global growth, with a wider spread of opportunities, not just in China, but also in India and many parts of Southeast Asia.

“On the whole, we are cautiously optimistic that 2024 will be a better year. Besides lower inflation, we expect higher GDP growth at 1.0 to 3.0 per cent,” he said.

According to him, Budget 2024 is about taking five concrete steps to build their shared future together.

They are to tackle immediate challenges for households and businesses; pursue better growth and jobs, equip the workers for life; create more paths for equality and mobility; provide more assurance for families and seniors; and forge a stronger and more united nation.

Under the fifth step, Wong set up a Future Energy Fund with an initial injection of S$5 billion.

“This will give us the confidence to invest in good time, put us in a better position to move quickly on critical infrastructure, and enhance our security in clean energy,” he said.

“We need to address an emerging security challenge – energy and the transition to cleaner fuels.

“In the near to medium term, natural gas, which currently generates almost all of our electricity, will remain critical.

“Our natural gas supplies come through pipelines from Indonesia and Malaysia, and in the form of liquefied natural gas from a range of sources,” said the deputy prime minister.

Wong noted that natural gas is the cleanest of fossil fuels, but “we will not be able to achieve net zero emissions if we continue to rely solely on natural gas.”

“Unfortunately, we do not have many options for clean energy – we have no tidal power, no wind power, and not enough land for the mass deployment of solar,” he said, adding that one way is to import low-carbon electricity.

However, he said, there is a limit to importing electricity without compromising security.

“So we will need other options to decarbonise the rest of our energy supply. That is why we are actively exploring other options,” he said.

Wong also gave notice that “further out in the future, we do not rule out nuclear power.”

According to him, nuclear technologies are advancing rapidly with smaller, safer, and more fuel-efficient designs.

“We will build up our capabilities so that we can critically assess the evolving technologies in this space and decide on the feasibility of nuclear deployment one day in the future,” he added. – BK