Singapore's fiscal prudence validated 'time and time again' amid global turmoil: Indranee Rajah

SINGAPORE: Singapore's careful approach to managing its finances has proven its worth over and over again, Leader of the House Indranee Rajah said in parliament on Friday (Mar 6).

Speaking at the end of the annual Budget process, Ms Indranee said the country's standing as a "beacon of safety, security and stability" in a world "rocked by turbulence and change" is not by accident.

“It is the result of successive budgets anchored on fiscal prudence, forward planning and catalysing new ways to catch the winds of change even as we provide for current needs. This approach has stood us in good stead,” she added.

In his Budget statement, Prime Minister and Finance Minister Lawrence Wong announced that Singapore’s budget surplus for the 2025 financial year is expected to reach S$15.1 billion (US$12 billion), more than double the earlier estimate of S$6.8 billion.

For the previous financial year, the country recorded a surplus of S$6.4 billion, up from an S$0.8 billion estimate.

Mr Wong attributed the stronger outcome partly to better-than-expected economic performance, particularly higher corporate income tax collections.

The figures drew scrutiny during the Budget debate. MP Gerald Giam (WP-Aljunied) said the pattern of projected deficits turning into surpluses was not an isolated incident but a consistent trend.

“While the government points to the volatility of tax revenue, this consistent underestimation raises fundamental questions of … whether the government is unnecessarily hoarding funds," he said.

Ms Indranee acknowledged that when the surplus was first announced, some had questioned whether the government had been too conservative. But much has changed in the world since the Budget statement was delivered, she said.

Economic uncertainty due to US tariff developments, and strikes by the US and Israel against Iran, with Iran's retaliation, have "added to the overall climate of uncertainty", she said, with potential knock-on effects on trade, investment, energy prices and the cost of living.

"As a small and open economy, Singapore will feel the knock-on impact keenly,” said Ms Indranee.

Seen in that light, the surplus is "less about marksmanship and a whole lot more about assurance and quiet confidence". "We have the ability to do more for Singaporeans with ballast and buffer against potential turbulence," she said.

“Our approach of fiscal prudence has been validated time and time again.”

PREPARE FOR THE BEST, PLAN FOR THE WORST

Ms Indranee pointed to two recent episodes to illustrate why prudent budgeting matters even when times appear calm.

Budget 2020 was delivered when the global economy was stable and the outlook rosy, she said. Within a month, COVID-19 struck – forcing the government to deliver four supplementary budgets and draw down roughly S$40 billion from past reserves.

Two years later, as the economy was recovering, the Budget statement was followed just six days later by Russia's invasion of Ukraine. 

"In all our Budgets, we prepare for the best but we also plan in case of the worst. History is a hard taskmaster and we must not ignore its lessons," Ms Indranee said. 

"Our reserves, and our surpluses, are things to be grateful for.”