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SINGAPORE: The Singapore government incurred an overall budget deficit of S$2.9 billion for financial year 2009.
The figure, at 1.1 per cent of Gross Domestic Product (GDP), is lower than the deficit of S$8.7 billion budgeted a year ago.
Delivering the Budget Statement in Parliament on Monday, Finance Minister Tharman Shanmugaratnam said this "better than expected performance" reflects the return of confidence to Singapore's economy.
The Singapore economy contracted by 2 per cent last year due to the economic downturn.
Resident unemployment reached 5 per cent in the third quarter of 2009 but has since fallen to 3 per cent.
Looking ahead, Mr Tharman said the prospects for 2010 are good, though it is important to be watchful for "risks".
He added that the path to recovery is unlikely to be smooth.
"Prospects for 2010 are good although we have to be watchful for risks. The IMF projects world growth to swing from negative territory in 2009 to 3.9 per cent this year. However the path to recovery is unlikely to be smooth,"
said Mr Tharman.
"The problems over sovereign debt in Greece could be contagious. Efforts by governments to reduce deficits so as to prevent unsustainable increases in debts, while necessary, will inhibit growth over the short term."
Barring further major problems, Singapore's economic growth is expected to be around 4.5 to 6.5 per cent this year.
Mr Tharman said this is a "strong expansion" though it does not reflect what the Singapore economy can sustain over the medium to long term.
There is a need to increase Singapore's productivity by 2 to 3 per cent a year over the next decade, as mapped out by the Economic Strategies Committee.
- CNA/ir
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