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Finance Minister Heng Swee Keat delivered the FY20 budget (year ending March 2021) on 18 February – the fifth budget under this term of government. Economists at Standard Chartered Bank review the data. USD/SGD is trading at 1.391.

Key quotes

“The accumulated budget surplus over the past four years is c.SGD 17.5bn (c.3.4% of GDP), allowing the government to announce a budget deficit of c.2.1% of GDP for FY20, the widest overall deficit in the past two decades.”

“The basic budget deficit of 2.3% of GDP is slightly more than the deficits for the years ending March 2004 and March 2010 of c.2.2% of GDP, put in place to cope with the adverse economic impact from the SARS outbreak and global financial crisis, respectively.” 

“Fiscal prudence has also allowed the government to allocate substantial funds for future spending. Top-ups to endowments and trust funds increased to 3.3% of GDP, the largest allocation in two decades.” 

“In Budget 2018, the finance minister noted that the GST rate might be hiked 2ppt to 9% sometime between 2021 and 2025. He has noted in his most recent comments that the GST increase will not take effect in 2021, although the increase will still be needed by 2025.”