Prime Minister and Minister for Finance Lawrence Wong has delivered Budget 2025. Let us look at what the budget tells us about how our PAP Government has carefully stewarded and managed Singapore’s income and expenses to meet different needs.
Spending more on Singaporeans
Over the past decade, Singapore’s budget has nearly doubled in size. The total expenditure is expected to hit $123.8bn in 2025 (16.9% of GDP). That is $55.8bn (or 45%) more than the budget in 2015.
Based on historical trends, this expenditure will continue to rise. By 2030, the government expects spending to reach 20% of GDP, said PM Wong.
This growth in the budget highlights the government’s unwavering commitment to address the changing needs of Singapore and ensure that all Singaporeans benefit from the nation’s progress.
Achieving long-term fiscal sustainability
Having run a deficit between 2020 and 2023, Singapore recorded a surplus of $6.4bn in FY2024. It is also expecting a similar surplus of $6.8bn for 2025. Generally, the government tends to underestimate its surplus while overestimating its deficits. However, it is this history of fiscal prudence that helped Singapore to ride out the storm during COVID-19.
As we can see, the deficit incurred in 2020 was $64.9 billion. Without the strength of our reserves, the government would not have had the buffer to cushion and protect Singaporeans from the full impact of the pandemic. Our reserves helped us keep Singaporeans in their jobs, with initiatives like the Jobs Support Scheme.
While Singapore has bounced back stronger, geopolitical risks continue to loom large. Therefore, Budget 2025, like all others before it, is about achieving long-term fiscal sustainability. The accumulation of surpluses will give Singapore savings to draw upon to withstand future shocks.
Growing our revenue to meet spending needs
This year’s operating revenue of $122.8bn is 5.3% more than in 2024. As with previous years, the bulk of the operating revenue comes from corporate taxes, personal income taxes and GST.
Due to strong economic growth in 2024, corporate income tax contributed $32.7bn to total revenue. That makes it the most significant contributor to total revenue and larger than the Net Investment Returns Contribution (NIRC) of $27.1bn.
In that sense, Singapore’s taxation is fair and progressive, with businesses and those who are better off bearing a greater share of the tax burden. As a result, the government is able to increase its share of transfers to help less wealthy households. For instance, the Assurance Package and permanent GST vouchers have cushioned the impact of the GST rise on many families.
It is also worth noting that asset taxes and stamp duty account for only about $12.81bn (or around 10%) of total revenue. Therefore, increasing both taxes alone, as suggested by many in the Opposition, would not have made up for the shortfall needed to support rising public spending.
Addressing immediate and long-term challenges
“While our revenues have increased, we have also spent more on Singaporeans,” said PM Wong. This philosophy sums up how the PAP allocates and runs a balanced budget.
Similar to previous years, Defence ($23.4bn), Health ($20.8bn), and Education ($15.3bn) ministries continue to form the largest share of government expenditure.
In general, all ministries will see an increase in their expected expenditure compared to FY2024. That is due to a series of initiatives to support Singaporeans at all stages of life. Whether you are a young adult, parent or a senior, Budget 2025 is a broad-based one to ensure no Singaporean is left out.
Besides the budget allocated to the different ministries, the government have also committed $23.3bn in special transfers to households, businesses, endowments, and trust funds.
They include $2bn for SG60 vouchers, $1.1bn for CDC vouchers, and $5bn each for the Coastal and Flood Protection Fund, the Future Energy Fund, and the Changi Airport Development Fund.
Building a fairer and more inclusive society
The PAP’s commitment to ensure that no Singaporean is left behind can be seen in its social development expenditure.
Since 2019, social development spending has nearly doubled. This year, the government has allocated $61.3bn, almost half the budget (49.5%), to fund social spending.
All of this points to a sustained effort to address inequality and social mobility. In addition, the budget has also become more inclusive over the years as it seeks to address the concerns of groups that require more help. One of these groups is the parents of children with disabilities. The government will offer a dollar-for-dollar matching grant to help these parents build a trust fund. The money will go towards helping care for the person with disability when their caregivers are no longer around.
Another group will be helped with the new Large Families Scheme, which provides financial support for each third and subsequent child.
“Singaporeans are at the core of everything we do. We will do all we can to develop and realise the potential of all our people so that they, in turn, realise their aspirations and dreams for themselves and their families,” said PM Wong.
From an economic point of view, sound fiscal fundamentals have always been the hallmark of a Singapore Budget. By spending within our means and not borrowing from the future, this formula has aided Singapore’s continued success and healthy public finances.
But in the end, what makes Budget 2025 and its predecessors a great budget lies in the PAP’s commitment to invest in Singaporeans.
After all, it is as PM Wong has said, “When Singapore thrives, every citizen benefits”. And that will always be the PAP way of governing this country.
Picture Source: Lawrence Wong via Facebook
