SINGAPORE: While Singapore has a strong fiscal footing, it must continue to maintain a sound and sustainable fiscal system, as well as a balanced budget over the medium term, said Finance Minister Heng Swee Keat on Wednesday (May 9).
New funding ideas for big-ticket infrastructure investments will also be explored and the Government must continue to be “good stewards” of the country’s reserves, he added in the Ministry of Finance’s (MOF) addendum to the President’s address opening the second session of the 13th Parliament.
President Halimah Yacob’s speech on Monday outlined the Government’s priorities for the rest of its term. MOF’s addendum addresses one of the five key themes identified: A Government that works with its people to create a better future.
Given the inevitable rise in public spending, especially in areas like healthcare, infrastructure and security, Singapore’s fiscal position is expected to “tighten considerably” in the coming years, said Mr Heng.
On the revenue end, Singapore has to adjust to changes in the global environment that could impact its competitiveness, including the reduction of corporate tax rates by several countries, he added.
But even as the Government raises revenue to meet growing expenditure needs, such as through the planned increase in the Goods and Services Tax (GST), Mr Heng stressed that taxes will stay competitive “to encourage private enterprise and individual initiative”.
The overall tax and transfer system will also be kept “equitable, fair, and progressive”, he added.
The Government will also continue to “seek the best value” for its spending through careful management of its expenditure growth and seeking more cost-effective solutions in the public sector, said Mr Heng.
New funding ideas for mega infrastructure projects are also on the cards, particularly through borrowing arrangements by statutory boards and government-owned companies.
“We will leverage the strength of our financial position to optimise our borrowing, and invest sustainably in longer-term infrastructure that will position Singapore well for the future,” said Mr Heng.
Mr Heng added that reserves provide Singapore with the means to weather shocks and crises, as well as strengthen investor and market confidence in the country.
Hence, the Government will continue to be “good stewards” of the national reserves, he said.
This will be done by upholding the existing framework that allows investment of reserves for long-term returns and the use of part of the returns to supplement budgetary needs.
MOF’s addendum also touched on initiatives to support Singapore’s vibrant and innovative economy, the development of Singapore as a smart, green, and liveable city, as well as fostering a caring, cohesive and inclusive society.
“The MOF supports the Government’s policies and programmes through a sound fiscal system that plans for the future, and an effective and efficient Government that innovates and delivers value for money,” said Mr Heng.
“We will harness our fiscal resources prudently and responsibly, so as to advance the well-being of all Singaporeans.”