Fiscal

We are committed to maintain a sound and sustainable fiscal system that enables us to realise our long-term plans for Singapore. We aim to run balanced budgets over the long term, while ensuring that there are sufficient resources to meet society’s needs.

What do we spend on?

Public spending is focused on public goods and infrastructure that enable our people and businesses to thrive and grow. We invest heavily in skills, education and infrastructure to develop our people and lay the foundations for long-term economic growth. We also commit a steady amount of spending on security to safeguard our way of life.

As our society ages, we have been increasing our social spending. Over the last decade, we have almost doubled our social spending from $27.2 billion in Financial Year (FY) 2014, to $56.1 billion in FY2024^.  Social spending continues to make up the largest part of annual Ministry expenditure, at about half of total Ministry expenditure. A large part of the increase has gone towards improving the quality, accessibility and affordability of healthcare, for which spending has more than doubled over this period.

^ Based on estimated FY2024 figures
* Refers only to Ministries Expenditure, Excluding Special Transfers and Top-ups to Endowment/ Trust Funds

Planning for the long-term

Fiscal policy in Singapore is characterised by a strong long-term orientation. We plan far ahead to prepare for longer-term challenges such as ageing and climate change. Doing so enables us to intervene effectively upstream, to avoid more costly interventions downstream. It also enables us to help our society and economy adjust to the challenges. 

We are planning ahead to cater for several new spending priorities going forward, including health and aged care, early childhood education and SkillsFuture, strengthening retirement adequacy, renewing our city infrastructure, managing the green transition, improving our economic competitiveness and protecting ourselves against new security threats. 

As part of this longer-term planning, we embarked on the Forward Singapore exercise to refresh our social compact and give more assurance to help Singaporeans navigate the uncertainties in today’s world. We will spend around $5 billion on Forward Singapore policy moves in FY2024, and close to $40 billion in total by the end of this decade. Key moves include the expansion of KidSTART and the enhancement of schemes such as the enhanced Baby Bonus, Workfare, Silver Support and the Matched Retirement Savings Scheme. We also introduced new measures such as the ITE Progression Award, the SkillsFuture Level-Up Programme, the ComLink+ Progress Packages, the Majulah Package, Healthier SG and Age Well SG, and financial assistance for the involuntarily unemployed.
 

Spending for outcomes

Even as we ensure sufficient public spending to meet the evolving demands of our economy and society, we seek to maintain a light fiscal burden on taxpayers. We seek to achieve strong outcomes while delivering value for money for taxpayers. Today, Singapore's Government expenditure as a share of GDP is among the lowest across advanced economies'.

Source: OECD database (https://data-explorer.oecd.org) and MOF
Note: Singapore (2030) assumes the projected upper bound for Government Expenditure

We spend relatively less of our GDP as a Government, and focus on achieving cost-effective spending. In areas such as education, health, policing, we have consistently achieved outcomes near the top internationally (e.g. PISA, healthy life expectancy, Gallup law and order index) despite lower levels of spending as a percentage of GDP than other jurisdictions.

Sources: MOF, WHO (Global Health Expenditure Database) and World Bank, Hong Kong Health Bureau

Notes: Data for Singapore is proxied using MOH’s total expenditure (Est. FY2024)

 

Sources: UNESCO Institute for Statistics, OECD, MOF.
Note: Data for Singapore is proxied using Set FY2024 total expenditure for Education 

 

Stewarding our resources for the future

Financial strength helps a small country with no natural resources like Singapore to respond effectively to crises. Over the years, we have been prudent and disciplined in building up our reserves. Our reserves have allowed us to deal with unexpected shocks such as the COVID-19 outbreak and be able to respond decisively by supporting Singaporeans and our workers amidst the pandemic. Unlike many other countries, our reserves have allowed us to do so without borrowing heavily and passing on the financial burden to future generations.

The total draw on reserves is around $40 billion from FY2020 to FY2022, less than the initial sum of $52.0 billion announced at the Fortitude Budget in FY2020. This is in part because of our swift and decisive response to the pandemic, which enabled us to avert worse public health outcomes. It reflects our prudence in the use of reserves.

Our reserves also contribute significantly to our total revenues available for annual spending. We have invested our reserves for the long-term, and the returns generated from investing our reserves are shared between present and future generations. Part of the investment returns* generated supplement our annual budget through the Net Investment Returns Contribution (NIRC). The NIRC forms one of the largest components of Government revenues, contributing about 20% to our annual budget for spending. We have to continue to fiscally plan in a responsible and sustainable manner, to ensure that each generation contributes and benefits fairly from the Budget. 

This is unlike the situation in many other advanced economies today. Most advanced countries pay about 2% of their GDP in debt servicing of accumulated debt (as shown at the lower half of the chart below). They collect taxes to pay off these debts. In Singapore, it is the opposite – we have grown a steady stream of returns from investments of our reserves for current spending (as shown in the top half of the chart below), which helps to keep our taxes low. This in turn helps to support many important areas of expenditure that are important to Singapore’s development and future growth. For example, NIRC’s annual contribution to Government revenue is larger than our annual spending on education. 

*Investment returns refers to Net Investment Returns Contribution. Interest payments refer to net general government interest payments, retrieved from OECD Economic Outlook Volume 2024 Issue 1 (May 2024)