In a surprising turn of events, Singapore’s Prime Minister and Finance Minister, Lawrence Wong, announced a fiscal surplus of 0.9% of GDP for the fiscal year 2025, maintaining the same level as in 2024. This announcement, made during the FY25 Budget speech, defied consensus expectations and Nomura’s forecast of a 0.3% deficit, largely due to the upcoming general elections. The unexpected surplus was attributed to higher corporate income tax revenues.
Despite the overall surplus, the basic balance, which excludes top-ups to endowment and trust funds, shifts to a deficit of 0.6% of GDP from a 0.1% surplus in FY24. This indicates an expansionary fiscal stance aimed at providing a buffer against external risks. The Ministry of Finance estimates the fiscal impulse to be at 0.9% of GDP, suggesting a more expansionary approach compared to FY24.
The Budget also introduced measures to address cost of living pressures, including an increase in Community Development Council vouchers to S$800 per household and doubling U-Save utilities rebates for eligible HDB households. Additionally, a new “SG60 package” was announced to commemorate Singapore’s 60th year of independence, offering SG60 vouchers and a 60% personal income tax rebate.
Further investments were earmarked for long-term priorities under the Forward SG agenda, including a S$3bn top-up to the National Productivity Fund and SGD5bn for the Changi Airport Development project. The Budget also supports worker upskilling through the SkillsFuture Level-Up Programme and a new SkillsFuture Workforce Development Grant.
Nomura revised its FY25 fiscal forecast to a surplus of 0.9% of GDP, reflecting the government’s long-term economic plans for sustainable and inclusive growth. The stronger-than-expected revenue collections in FY24, driven by corporate income tax, suggest a positive outlook for 2025, allowing for potential future fiscal support measures.
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