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SINGAPORE - Singapore's budget deficit could be three times larger than initially estimated this year partly because of the global economic turmoil, the finance minister said in comments released Tuesday.
The government originally projected a deficit of S$800 million this fiscal year but expenditures are now expected to be significantly higher than budgeted, Tharman Shanmugaratnam said.
"We should therefore expect a significantly larger deficit in FY08 (fiscal year 2008) -- possibly more than three times larger than the initially estimated 800 million dollars," he said in a written response to a question raised in Parliament on Monday.
There may be some dampening of revenues in view of lower-than-expected economic growth and more subdued property transactions, especially in the last two quarters of the fiscal year, the minister said.
At the same time, government expenses have risen with an August announcement that cash handouts to ease the burden of a rising cost of living would be increased by 50 per cent along with electricity rebates, Mr Tharman said.
In August, the government also announced a doubling of spending on incentives to address a severe shortage of babies. These measures and "higher cost factors in infrastructural projects" have also contributed to the higher deficit, he said.
"The larger deficit is an appropriate fiscal stance in the context of an economy that has entered a slowdown," he said, adding that the government would not seek to reduce the deficit by cutting spending or raising additional revenue.
"We will be able to fund the larger deficit from the surpluses (S$6.4b) we accumulated in FY07, when we had unexpectedly higher revenues."
Singapore, which is already in recession, could experience negative growth next year, Prime Minister Lee Hsien Loong warned on Sunday.
To help deal with the downturn and to prepare for the future, the government is bringing forward its budget from February to January, Mr Lee said.
The proposed budget will include measures to support growth and jobs, strengthen business competitiveness and stimulate domestic demand, he said.
- AFP/yb/ir
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