Singapore budget expected to include tax hike and Covid-19 relief package, with yearly deficit projected

Singapore will unveil its annual budget on Tuesday, with economists expecting a deficit of as much as S$8 billion

The budget includes a substantial coronavirus relief package and other spending measures to lift the economy

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Singapore will unveil its annual budget on Tuesday, with analysts expecting higher spending on health care, infrastructure and training, and a coronavirus relief package. Photo: Reuters

Published: 5:00pm, 16 Feb 2020Updated: 2:58pm, 25 Feb 2020

Singapore is set to unveil its biggest annual budget since 2009 on Tuesday, one that is expected to include a goods and services tax increase to offset a substantial spending package that includes a coronavirus relief package.

All told, economists estimate that Budget 2020 could incur a deficit of almost S$8 billion (US$5.78 billion). The country is known for its fiscal prudence and is cautious with its projections.

The last time Singapore announced a huge deficit was in 2009 during the global financial crisis when it expected an overall deficit of S$8.9 billion. That number later shrank to just S$819 million.

Buildings in Singapore’s central business district. DBS evacuated 300 workers on one floor as a result of a coronavirus case. Photo: Bloomberg

What was supposed to be an election-year budget with several sweeteners has evolved into an epidemic-focused fiscal outlay that experts think is likely to be the city state’s largest since 2009.

Singapore has to call for an election by April of 2021, although some pundits had predicted it could be called as soon as next month. But a snap election by the governing People’s Action Party is looking increasingly unlikely given the coronavirus outbreak.

Maybank Kim Eng analysts expect the budget to be filled with “pre-election goodies” such as higher spending on health care, infrastructure, training and special transfers including money that could go into a fund to fight climate change.

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