SINGAPORE — Deputy Prime Minister and Finance Minister Lawrence Wong underlined that building resilience comes at a price, as he fleshed out Singapore’s Budget for 2023, whose theme is “Moving Forward in a New Era.”
As with other years, DPM Wong highlighted the good news: economic growth of 3.6 per cent as well as the unemployment rate of 2.8 per cent by the end of the year, both of which are at pre-Covid levels.
The bigger picture, however, remains uncertain due to global circumstances, including 2022’s global inflation rate of around 9 per cent, in comparison to 4.7 per cent the previous year.
DPM Wong said that $3.1 billion is expected to be drawn from past reserves for the funding of pandemic public health expenses, an amount lower than was previously thought. Instead of drawing down the amount of $52 billion from past reserves from FY2020 to FY2022, this amount has been adjusted to $40 million.
DPM Wong also announced that for Fiscal Year 2022, he expects there to be a deficit of $2 billion, or 0.3 per cent of the GDP, but added that growth of 0.5 per cent to 2.5 per cent is expected for the coming year.
For 2023, he said a deficit of $0.4 billion, or 0.1 per cent of GDP, is expected but added that this year’s Budget will not need to draw on past reserves, unlike in the past three years of the Covid pandemic.
Acknowledging that many Singaporeans are feeling the pinch with higher costs of living, he said that additional support in the form of an additional $3 billion to the Assurance Package, which now totals $9.6 billion, as well as the Enhanced GST Voucher scheme, will help the majority of households to offset additional Goods and Services Tax expenses for five to ten years.
He also discussed the various bonuses, payments, and additional support that Singaporeans may expect in the coming year, but added that he hopes “all Singaporeans understand that it is not fiscally sustainable to rely so heavily on government support year after year to cope with inflation.”
Households with children and the elderly are particularly receiving additional support this year, with children up to the age of six to receive a $400 top-up to their Child Development Account, and those older than six to receive a $300 top-up to their Edusave or Post-Secondary Education Account.
Nevertheless, he acknowledges the concern young Singaporeans face around the long waiting time for HDB flats at the same time resale home prices are also going up, announcing that young couples will get an additional ballot for their BTO applications.
Additional support for lower-wage workers was also announced, with the government continuing to co-fund increases in salaries.
As for families, DPM Wong announced that working mothers may also get a higher amount of fixed tax relief, especially for those with Singaporean children born or adopted on or after Jan 1, 2024.
Moreover, he announced an additional baby bonus cash gift of $3,000 for Singaporean children born from Feb 13 and onward. These children will also have higher government contributions to the Child Development Account, to aid their parents in offsetting school and healthcare expenses.
Notably, government-funded paternity leave will double for fathers of Singaporean children born from Jan 1, 2024. Moreover, parents’ unpaid infant care leave will also double to 12 days per year each for the first two years of the child’s life.
DPM Wong also announced additional support by way of a top-off to ComCare Endowment, MediFund, and the ElderCare Fund, the rollout of KidStart, and more full-day childcare places.
Saying that the government will need to spend more in order to grow the economy, strengthen social safety nets and enhance national resilience, he also announced that there will be changes to the tax system.
DPM Wong ended his speech by saying “We are a little red dot – a country that was never meant to be,” but added that founding Prime Minister Lee Kuan Yew had set the tone for how Singapore should respond to challenges, which is “with grit and tenacity, and with the courage to dream big and to turn these dreams into reality.” /TISG
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