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Budget 2024 focuses to lift Singapore’s capabilities and build buffers amid global uncertainties. It kickstarts the 4G leadership team’s multi-year execution of long-term policy priorities outlined in the Forward Singapore (Forward SG) exercise (see ‘Forward Singapore: A roadmap towards resilience’).

Focus on a vibrant economy

Significant emphasis has been placed on sustaining economic growth by keeping the investment environment attractive, riding emerging trends to capture new opportunities, and enhancing human capital. The government strives to achieve an average of 2% to 3% per annum over the next decade, with focus on productivity and innovation, while recognising land, labour, and carbon constraints.

We expect measures such as SGD2bn top-up to the National Productivity Fund, SGD2bn injection into the Financial Sector Development Fund (FSDF), and additional SGD3bn contribution towards research and development to strengthen Singapore’s global competitiveness. Singapore will also introduce a new refundable investment credit (RIC) scheme. The broad coverage of activities should hopefully continue to anchor quality foreign investments by big companies in Singapore.

New initiatives to deepen the use of Artificial Intelligence (AI), such as introducing more than SGD1bn investment for talent and industry development over the next five years, as part of the refreshed National AI Strategy 2.0 can spur long-term productivity gains. The world, including Singapore, is aiming to decarbonise and transit to a net-zero future to prevent climate catastrophe. Enhancements to the Enterprise Financing Scheme – Green and the Energy Efficiency Grant (EEG) should therefore provide impetus for small and medium-sized enterprises (SMEs) to adopt green solutions. A new SGD5bn Future Energy Fund could also generate opportunities by catalysing greater public-private partnership in critical infrastructure, as Singapore aims to shift to 30% renewable energy import mix by 2035.

Human capital investments by making SkillsFuture a key pillar of Singapore’s social compact, will encourage lifelong learning and continuous upskilling. We expect efforts to nurture talent to sustain a key enabler of Singapore’s growth.

Greater assurances and promoting inclusivity

As part of refreshing Singapore’s social compact laid out in Forward SG, the budget provides greater assurances and promotes inclusivity on multiple fronts.

First, further enhancements to the Assurance Package (AP) (SGD1.9bn) and GST Voucher (GSTV) Fund (SGD6bn) would continue to help lower to middle income families tide through the near-term cost-of-living pressures from still-high, albeit cooling, inflation. Additionally, the personal income tax rebate for year of assessment 2024, one-time MediSave bonus, and NS LifeSG credits will also help to tackle high costs. Homeowners can also expect lower or same property taxes, with an increase in the annual value bands of owner-occupier residential property tax rates from January 1, 2025.

Second, the government continues to focus on greater equality and inclusivity. For e.g., enhancements to the Workfare Income Supplement scheme, increase in local qualifying salaries, upskilling support through the new ITE Progression Award, and ComLink+ Progress Packages, alongside other family policies, will support the policy agenda, resulting in a more equitable society over the coming years.

Lastly, the budget provides more social safety nets for seniors, amid a rapidly ageing population. The slew of support from higher CPF contribution rates of further 1.5 percentage points for workers aged 55 to 65, enhancements to the Silver Support Scheme and the Matched Retirement Savings Scheme (all starting in 2025), as well as the Majulah Package, are likely to boost retirement adequacy. The SGD3.5bn set aside for the Age Well SG programme over the next decade will enable Singapore to better handle a rapidly ageing population.

Adherence to fiscal prudence, despite rising spending pressures

Budget 2024 allocates a fiscal surplus of SGD0.8bn (0.1% of GDP), with the government estimating a broadly unchanged fiscal impulse. FY2024 operating revenues are budgeted to rise, partly due to a strong pick-up in goods and services tax (GST) collections from the GST hike to 9%, and asset taxes. These would be faster than the increase in total spending, as rising operating and development expenditures are dampened by a pull-back in special transfers (see overall fiscal position table on page 6 in PDF).

Taking into account revised FY2023 and budgeted FY2024 figures, we estimate that SGD0.8bn surplus has been accumulated for the current term of government.

The Ministry of Finance (MOF) expects continued increase in government spending in this decade, following upside pressures over the past decade. However, the medium-term fiscal position is getting tighter. The government has therefore adopted decisive revenue raising moves in past budgets, for e.g. hikes to the GST rate to 9% from 7% – the third largest operating revenue. FY2024 GST revenues are set to rise to a high of 2.7% of GDP from FY2022’s 2.1% of GDP. Additional impetus would also come from changes to property related measures, personal income tax, wealth and sin taxes announced in recent budgets. Moreover, the Net Investment Returns Contribution (NIRC) at more than 3% of GDP in FY2024 and also likely in the long-term is also critical to sustaining Singapore’s overall budget. In totality, Singapore continues to uphold its long-held principle of fiscal responsibility and prudence by taking a strategic and long-term approach to allocate finite fiscal finances, even amid rising spending pressures in the medium-term.


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