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Budget will raise living standards

04 Mar 2008

MR TAN Jiaqi ('Rebates: Govt must watch inflation', March 1) pointed out that increasing the amount of money in the hands of people, directly and equally for all, will only worsen inflation, and highlighted the risk of the Government over-stimulating the economy through fiscal policy.

Mr Tan is right. This is why the Government's overall fiscal policy for 2008 aims to be neutral in its impact on the economy. The overall government Budget is projected to be in small deficit.

However, if we exclude net investment income from reserves and transfers to endowment funds, which have no immediate impact on the domestic economy, the Budget balance is close to zero.

Growth dividends and other transfers to Singaporeans in the Budget gave something to all Singaporeans, but not equally. Lower-income households received much more, in proportion to their incomes. Further, a significant part of these transfers was not for immediate spending, including increased financial support for post-secondary education, top-ups to Medisave accounts and CPF bonuses. These measures will help young Singaporeans upgrade their skills and capabilities, and older citizens afford their health-care and retirement expenses. Hence the Government's Budget for 2008 will not over-stimulate consumption now, but will enable Singaporeans to continue improving their standards of living in future.