Supportive Budget; Government Issuance To Rise SGD 90bn

Deputy Prime Minister Heng Swee Keat delivered the budget on Tuesday, he stated that the 2021 budget will shift "from containment to restructuring" as Singapore's economy continues to reopen. Heng outlined a fiscal package worth SGD 11bn to support vaccination efforts and economic segments hit hard in the pandemic.

• The country held a general election last July, in the middle of the Covid-19 pandemic, so this is the first budget for the current term of government.
• Singapore's constitution requires the government's revenue and expenditure to be balanced over a typical five-year term. In the last few electoral cycles, the government accumulated surpluses — which allowed it to fund bigger budgets later. The government is expected to draw SGD 53.7bn from its reserves to fund Covid support measures in 2020 and 2021.
• The minister said plans laid out will mean issuance of an additional SGD 90bn in new bonds to fund major long-term infrastructure projects.
• Budget 2021, with the theme Emerging Stronger Together, combines measures to help families, workers and businesses weather the COVID-19 crisis in the immediate term, with measures to accelerate structural adaptations for the long term.
• In terms of specific measures around SGD 4.8bn is earmarked for public health and safe reopening measures, including vaccination, contract tracing and testing capabilities. Several existing schemes to subsidise wages of workers and provide financing to businesses have been extended. There is targeted support for select sectors such as aviation, land transportation and arts.
• The timeline for Singapore's Goods and Services Tax (GST) hike has been keenly watched since it was first announced in 2018 that the tax will increase from 7% to 9%. It was outlined in the budget that the tax increase will not take effect this year, instead it will happen sometime between 2022 and 2025, and "sooner rather than later". It is needed to meet Singapore's rising recurrent needs, in particular healthcare spending, said Heng. But there will be some relief when the tax is eventually raised, in the form of a S$6 billion Assurance Package. The decision will effectively delay the effect of the GST increase for a majority of households "by at least five years", said Heng.