SINGAPORE (Reuters) - Singapore presented a bigger budget for the coming year, providing support for the struggling sectors, but keeping a surplus in case global economic conditions worsen and put the city-state’s growth at risk.
Following up on recommendations by a key advisory panel this month, the budget unveiled projects to invest in infrastructure, deepening the workforce’s tech skills and digitalizing the economy.
Firms will get help to scale up and invest overseas to tap into the growing markets around Singapore, as the government aims to maintain an average 2-3 percent annual growth rate over the next 5-10 years.
Singapore’s budget surplus for the fiscal year beginning April 1 is expected to be 0.4 percent of economic output, compared with an estimated 1.3 percent in 2016/17. Expenditures would be 5.2 percent higher than in the current year, at S$75.07 billion ($52.9 billion).
“When I presented the last budget, Brexit seemed remote and the U.S. had just started the process of electing their new president. Events since then are a stark reminder of how quick and unpredictable change can be,” Finance Minister Heng Swee Keat told parliament on Monday.
“As we expect expenditures to continue rising in the long term, this budget position is prudent, while supporting firms and households in the midst of continued economic restructuring,” Heng said.
Singapore’s wide-open economy is highly dependent on trade, and Washington’s pull-out from the Trans Pacific Partnership trade deal has been a major blow to the island’s growth plans.
The first water price hikes in almost two decades and a 2019 carbon tax will later aid the revenue side. The budget contains extra funds to help lower-income households handle their bills.
The overall budget surplus for the coming budget year is expected to be S$1.9 billion.
Previously-announced foreign workers levy hikes in the marine sector were deferred, but the government will proceed with hikes in the construction sector.
To aid construction, the government announced that S$700 million in infrastructure projects will be brought forward to 2017 and 2018.
The measures come at a time when labor market conditions have worsened amid lackluster economic growth, with job redundancies in 2016 hitting a seven-year high and total employment recording the smallest increase in 13 years.
Singapore posted its fastest growth in more than six years in the fourth quarter, expanding at an annualized 12.3 percent from the previous three months. But full-year growth in 2016 remained anemic at 2.0 percent.
($1 = 1.4177 Singapore dollars)
($1 = 1.4187 Singapore dollars)
Reporting by Marius Zaharia, Masayuki Kitano and Aradhana Aravindan; Writing by Marius Zaharia; Editing by Richard Borsuk