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Singapore posts budget deficit of 6.7 bln Singapore dollars for FY2015

Xinhua, February 23, 2015 Adjust font size:

Singapore is expected to run a budget deficit of 6.7 billion Singapore dollars (4.96 billion U.S. dollars) for the fiscal year 2015 (FY2015), which is about 1.7 percent of its GDP, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said Monday.

Delivering the budget speech in the parliament, Tharman said the deficit comes mainly because the government is setting aside 6 billion Singapore dollars (4.4 billion U.S. dollars) for future investments, including the Changi Airport Development Fund, which alone absorbs 3 billion Singapore dollars (2.2 billion dollars). If exclude the funds, the budget for FY2015 will be quite close to balance.

The Changi Airport Development Fund will raise money for the development of Changi Airport's new terminal, T5, which will be almost as large as T1 to T3 combined. The new terminal is part of Singapore's plan to reinvestment infrastructure to meet future economic and social needs, the finance minister said.

"These major investments in Singapore's future will mean significantly higher development expenditures," Tharman said, adding that the development expenditures have increased from 12 billion Singapore dollars (8.9 billion dollars) five years ago to about 20 billion Singapore dollars (14.8 billion dollars) in the coming fiscal year, which is around 4.8 percent of GDP. He said such expenditures will grow further by 50 percent to about 30 billion Singapore dollars (22.2 billion dollars) by the end of this decade.

Another big investment will be in healthcare sector, as the minister said healthcare spending is expected to rise from over 9 billion Singapore dollars (6.7 billion dollars) in 2015 to over 13 billion Singapore dollars (9.6 billion dollars) in 2020.

"Government spending will inevitably rise," said the minister. "We project overall spending to reach about 19 percent to 19.5 percent of GDP on average over the next five years. This is about 1 percent of GDP higher than the revenues we have today."

As to the fiscal year of 2014, he said the government expects to see a small deficit of 0.1 billion Singapore dollars (74.1 million dollars), adding that the overall inflation is expected to close to zero overall in 2015, and the labor market remains close to full employment.

The Singapore economy grew by 2.9 percent, slower than the 4.4 percent in 2013. The Ministry of Trade and Industry said it expects the economy to grow by 2 to 4 percent in 2015 due to uncertain global outlook.

"The current global environment is not, however, just a temporary challenge. We may see prolonged sluggish growth in the advanced world, as well as continued consolidation in China's growth as it reforms and rebalances its economy. We should not count on significantly stronger global demand over the medium term, " the minister explained. Endi