Higher-than-Expected Revenues and Majulah Package Contribute to Deficit
Singapore’s fiscal deficit for FY2023 has been revised to S$3.6 billion, a significant increase from the earlier estimate of S$350 million. The adjustment is mainly attributed to the S$7.5 billion Majulah Package, which was introduced during the National Day Rally. This revised deficit represents 0.5% of the country’s GDP.
Despite the wider deficit, Singapore’s primary deficit narrowed, thanks to higher-than-expected operating revenue. Total operating revenue for FY2023 was revised upwards to S$104.3 billion, an increase of 7.9% from earlier projections and 14.6% higher than FY2022’s revenue.
Corporate income tax collections were a major driver of this revenue increase, amounting to S$28.4 billion, well above the S$24.3 billion estimate. Personal income tax collections also exceeded expectations, reaching S$17.5 billion. Other contributors to the revenue boost included vehicle quota premiums and various taxes, such as the foreign worker levy and water conservation tax.
On the spending side, total expenditure for FY2023 was revised to S$106.9 billion, an increase of 2.6% from the previous estimate. This rise in expenditure was due to the resumption of deferred projects, particularly in the defense and healthcare sectors. Notably, the Ministry of Defence and the Ministry of Health saw substantial increases in their budgets.
Special transfers remained unchanged at S$2.8 billion, even with the Cost-of-Living Support Package announced in September. Overall, the revised budget surplus for FY2022 turned into a fiscal deficit for FY2023, with higher top-ups to the endowment and trust funds, particularly for the Majulah Package.
