UOB anticipates a fiscal deficit of $2.7bn, or 0.4% of GDP, for FY2025, as the government aims to address cost-of-living pressures whilst maintaining fiscal prudence.
Singapore’s Budget 2025, set to be presented on 18 February by Prime Minister and Finance Minister Lawrence Wong, is expected to adopt an expansionary stance. This budget, likely the last under the current government term, comes ahead of the General Elections and Singapore’s 60th independence anniversary.
The fiscal outlook for FY2024 is stronger than initially projected, with an estimated surplus of $5.0bn, or 0.7% of GDP, compared to the earlier budgeted $0.8bn. This improvement is attributed to higher-than-expected corporate and personal income tax collections, driven by robust economic growth and increased Goods and Services Tax (GST) receipts following a rate hike to 9% in January 2024.
Key themes for Budget 2025 are expected to include measures addressing cost-of-living and job security, strategies to boost fertility, and investments in areas such as artificial intelligence, finance, and green transition. These initiatives align with the Forward Singapore Report and recent national announcements.
Despite a projected slowdown in corporate income tax growth, the implementation of the Income Inclusion Rule and Domestic Top-up Tax under BEPS 2.0 is expected to provide some cushioning. Meanwhile, healthcare expenditure is anticipated to rise, driven by an ageing population and enhancements to the MediShield Life scheme.
As Singapore navigates geopolitical tensions and cybersecurity threats, defence spending is expected to stabilise. The budget’s expansionary approach aims to balance immediate economic needs with long-term fiscal sustainability.
