International Business & Economy Singapore’s ‘hefty’ 2019 national budget underway before the upcoming elections

Singapore’s ‘hefty’ 2019 national budget underway before the upcoming elections

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The Singaporean government is ready to announce this week the 2019 budget described as “generous” and “expansionary.” This will be months before the local elections kick in.

In a recent report released by Maybank Kim Eng, a Malaysian financial service company, the budget consists of health care cost subsidies and other expenditures for the Singaporean citizens.

The supposed elections for 2021, according to Lee Hsien Loong, Singapore’s prime minister, will be held this year or almost two years ahead of schedule.

Lee’s leads the People’s Action Party that has been in existence for six decades since 1959. This was prior to the independence of the city-state.

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For the very first time since 2016, the government is set to spare more funds compared to its annual set earnings for the coming national elections and drive economic reforms despite the dwindling tensions worldwide.

Singapore’s budget deficit will be between S$1.2 billion and S$6.9 billion or around US$883.3 billion to US$5.08 billion, based on early forecasts. This value is about 0.3% to 1.5% of Singapore’s GDP.

The small but rich member of the Southeast Asian nations has the potential to gain a higher budget deficit than anticipated with its huge budget surpluses in the previous years.

As cited in the country’s Constitution, the Singaporean government should have a balance revenue and expenditure during the five-year term. The 2019 budget is considered the fourth and the last prior to the new electoral period.

For the past four fiscal years, the country’s accumulated surpluses were about S$20 billion, as cited by Citi analysts. This provides Finance Minister Heng Swee Keat, who is anticipated to be Lee’s successor, a full budget if he decides to pursue government projects that require higher spending in the next couples of years during his term.

But Citi noted Heng will most likely be wise in spending the public funds. In general, Singapore is very conservative in its overall spending. Based on Citi analysts’ forecast, over 50% of the surpluses will be stored in the country’s reserves.

Senior Singaporeans born in the 1950s will be the main recipients of the anticipated fiscal year’s budget. Health care subsidy packages will be provided for the estimated 500,000 Singaporean elderly.

The government’s initiative is known as the “Merdeka Generation Package.” In Malay, Merdeka means ‘independence.’

This program has been announced by Lee since last year and the full details will be available during the budget speech on Feb 18. (Monday).

OCBC economists noted the package could be around S$4 billion to S$7 billion. However, both Citi and Maybank analysts cited it would be higher as high as S$8 billion.

OCBC added if the 2019 national budget will be a related pre-election spending program, based on the bank’s previous assessment on city-state’s expenditure, Singaporeans could expect personal income tax rebates and cash bonuses.

Currently, Singapore’s growing economy remains resilient because of its steady global commerce despite the existing trade tensions between the U.S. and China. Singapore’s GDP increased by 3.2% in 2018, a bit lower from 3.9% the past year. For 2019, growth is set to be moderate amid the external threats in the business climate.

The Finance Ministry said the 2019 budget will assist firms to increase their productivity and be globally competitive. This budget continues to incentivise the company to adopt new technologies and apply innovation to widen their business market reach.

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