Government balance to remain in “healthy surplus” in 2020

The city’s public finances remain sound despite a higher budget deficit.

The general government balance is expected to remain in a “healthy surplus” and above 0.5% of the GDP in 2020, according to estimates from Fitch Ratings. This includes contributions to and payouts from the Central Provident Fund, as well as receipts from land sales.

It noted that the city’s public finances remain on a sound footing, and favoured the government's conservative approach to management. “Despite the increased deficit, the government will still meet its rule of maintaining a balanced budget over the course of a single parliamentary term,” the report stated.

Also read: Singapore Budget 2020 Full Coverage: COVID-hit sectors to get $4b and GST hike moved to 2025

Singapore's fiscal moves to support the economy are likened to policy trends around the region. For instance, Hong Kong's financial secretary said that Hong Kong may post its largest ever deficit in the budget for FY2020. Governments in Japan, South Korea, Malaysia and China also signalled a willingness to hike fiscal support in the wake of the virus outbreak.

Fitch projects Singapore's economic growth to be closer to 0.6%, with downside risks depending on how the virus outbreak will fare.

Deputy prime minister and financial minister Heng Swee Keat revealed during his Budget 2020 speech that the city’s overall budget deficit hit $1.7b in FY 2019, or 0.3% of the GDP. The government expects an overall deficit of $10.9b or 2.1% of the GDP in 2020.