Is Singapore on the verge of a fiscal shortfall?

It’s about to run its largest budget deficit in history.

The city-state may be spending more than it can generate, as analysts’ concerns about Singapore’s fiscal plans for 2016-17.

In fact, a report by Deloitte said the increase in expenditure over the previous budget is $5b, an increase of 7.3%.

“This will also be the first time in a decade that Singapore has recorded a primary deficit for two consecutive years,” the report noted.

Meanwhile, Deloitte added that the overall budget balance is projected to remain a surplus. “This is primarily because of the inclusion of Temasek Holdings in Singapore’s National Investment Returns (NIR) framework,” Deloitte noted.

Temasek is a state-owned investment fund, which now joins Government of Singapore Investment Corporation (GIC—another state-owned investment fund) and the Monetary Authority of Singapore (MAS) as part of the NIR framework, Deloitte explained.

“The NIR framework, implemented in 2009, allows the government to spend up to 50 percent of expected long-term real returns on the net assets managed by Temasek, GIC, and the MAS.5 The NIR’s contribution to the budget for 2016 is S$ 14.7 billion, up from S$ 9.9 billion in the previous fiscal,” the report added.