SINGAPORE: Lower-than-anticipated spending and one-off contributions leading to higher revenue for the year ending Mar 31 handed the Government coffers a bumper surplus well above expectations.
The expected overall budget surplus of S$9.61 billion for this financial year, which worked out to 2.1 per cent of gross domestic product (GDP), is higher than FY2016’s S$6.12 billion and well above the S$1.91 billion official estimate.
In dollar terms, this marked the biggest single-year budget surplus in 30 years. As a percentage of GDP, the figure outperformed recent years but remained lower than FY2007, 2000, 1999 and 1997, according to figures provided by the Ministry of Finance.
For FY2017, total expenditure came up to S$73.92 billion, a rise of 4 per cent from the spending of S$71.04 billion in FY2016 but 1.5 per cent below the forecast of S$75.07 billion, thanks to lower-than-estimated spending on housing, transport, education and healthcare.
This was, however, partially offset by higher spending in social and family development.
Operating revenue for the current financial year came in at S$75.15 billion, 9 per cent higher than the S$68.96 billion in FY2016 and 8.2 per cent more than the estimated S$69.45 billion.
The main contributors to the higher revenue were "exceptional" statutory board contributions totalling S$4.9 billion and higher stamp duty collections of S$4.7 billion.
The former surpassed initial estimates of S$0.3 billion, while the latter, which came on the back of the recent pick-up in the local property market, will be S$2 billion more than expected.
These were offset by lower collections from Goods and Services Tax (GST), motor vehicle taxes and vehicle quota premiums.
Meanwhile, the total of S$14.61 billion in net investment returns contribution (NIRC) more than offset the S$6.23 billion in special transfers and top-ups to endowment and trust funds.
Some of this year’s exceptional surplus will be saved for future spending, said Finance Minister Heng Swee Keat on Monday (Feb 19). Of which, S$5 billion will be set aside for a Rail Infrastructure Fund, S$2 billion for premium subsidies and other forms of support when the ElderShield review is complete, as well as a one-off SG Bonus.
Referring to the higher-than-anticipated collections from statutory boards and stamp duty this financial year, Mr Heng emphasised that both will likely be one-off contributions.
“We do not expect either to occur every year. It is not a structural surplus. We cannot base our long-term fiscal planning on the basis of exceptional factors being positive, year after year,” he said in Parliament as he delivered the Budget statement for 2018.
FY2018 BUDGET TO REMAIN EXPANSIONARY
For FY2018, the budget remains expansionary, with total expenditure across all ministries likely to hit S$80 billion.
That will be 8.3 per cent, or S$6.1 billion, higher than the previous year on the back of more spending across all sectors, in particular social and infrastructure.
On the whole, the Government expects a slight budget deficit of S$0.6 billion, or 0.1 per cent of GDP.
The Ministry of Transport (MOT) is expected to see the largest expenditure increase to S$13.7 billion, from S$9 billion in FY2017, due to projects like the Kuala Lumpur-Singapore High Speed Rail.
This will also put MOT second in the league table of expenditure, leapfrogging education and health, which were in second and third places, respectively in FY2017.
Ministries in charge of defence, as well as trade and industry, are also expected to see increased expenditure to S$14.8 billion and S$4.4 billion, respectively.
On the other hand, the Ministry of Health will see a slight reduction in spending to S$10.2 billion on the back of lower development expenditure. This comes as construction projects, such as the National Centre for Infectious Diseases, enter a lower expenditure phase as they near completion.
However, given that health development expenditure can be lumpy and development requirements will pick up again as new projects progress, the longer term trend of increasing demand for health and eldercare services will continue as Singapore’s population ages.