Maintaining Sound Public Finances and Balanced Budgets over the Medium-Term08 Feb 2023
The Ministry of Finance (MOF) has published an Occasional Paper titled “Medium-Term Fiscal Projections”. This Occasional Paper examines the fiscal implications of our medium-term challenges, and projects the Government’s expenditure and revenue up to Financial Year 2030 (FY2030).
2. Government spending is expected to increase to around 19%–20% of GDP in the FY2026–2030 period, and possibly exceed 20% of GDP by FY2030. A key driver for this increase is government healthcare expenditure. Besides healthcare, we also factored in the fiscal impact of spending moves that the Government has already committed to, such as uplifting lower-wage workers and improving early childhood education.
3. Our total revenue, comprising operating revenue and Net Investment Returns Contribution, is now about 18.5% of GDP. This would not have been sufficient to cover the increase in Government spending expected over the coming years. That is why the tax changes announced in Budget 2022, including the Goods and Services Tax (GST) increase, were necessary to close the funding gap.
4. The expenditure projections do not take into account future policy moves, such as additional spending to strengthen our social compact and economic competitiveness. If there are such further spending increases, we will need additional revenues to balance the budget in the medium term.
5. Singapore’s fiscal strength is a key competitive advantage for our nation. As our spending needs continue to rise, we must make sure that our revenues grow at a comparable pace, to maintain a sound and sustainable fiscal system. The Government will continue to review and adjust our fiscal strategies to support our shared aspirations in a way that is fair to both present and future generations of Singaporeans.
Issued by Ministry of Finance
8 Feb 2023