This article was first published on Feb 9, 2015
Most economists expect a modest surplus in the government coffers for the financial year ending March 31, despite slowing economic growth, the muted property market and higher social spending.
A surplus - when the Government spends less money than it takes in - would provide more leeway for Budget 2015 to contain goodies for all Singaporeans, as the nation marks its 50th birthday.
Estimates obtained by The Straits Times show that economists' expectations for the Government's budget position range from a very small deficit to a surplus of more than $2 billion, for the financial year that ends on March 31. The official estimate projected at the start of the 2014 financial year was for a $1.16 billion deficit.
A Budget surplus of $3.92 billion was recorded in the 2013 financial year.
While the Government ramped up social spending last year - most noticeably on the $8 billion Pioneer Generation Package - it likely also took in more revenue, said CIMB economist Song Seng Wun.
Revenue from stamp duties plunged amid property market cooling measures, and takings from the Goods and Services Tax (GST) went up at a more sedate pace owing to muted consumer sentiment last year.
However, this was offset by stronger contributions from income taxes, which make up 44 per cent of government revenue, added Mr Song.
He expects a surplus of about $400 million for the financial year ending March 31.
OCBC economist Selena Ling expects to see a surplus of about $2 billion, as "data shows the operating revenue last year was running at about 10 per cent above plan".
"Property stamp duty and auto vehicle tax revenue still remain healthy despite some slowdown," she added.
Some economists expect the budget position for the coming financial year to be comparable to this financial year.
"Unless we get a lifting of cooling measures in property and car loans, revenue there will remain fairly subdued," said Ms Ling.
"However, short of the whole global economy going into a tailspin this year, it's not likely that we will see a big drop-off in revenue."
UOB economist Francis Tan expects a stronger budget surplus in the next fiscal year. He expects to see revenue from stamp duties and GST recover, as "consumer sentiments and demand should improve from 2014".
The complication of predicting the budget position is always compounded by another factor, the amount the Government gets for the Net Investment Returns Contribution - the portion of the returns on past reserves that the Government can take into its Budget - and which forms a significant component of the Government's annual budget.
Economists said, based on the performance of GIC and Temasek Holdings, that number is unlikely to be significantly lower than the previous year's contribution of around $8 billion.
Another factor that makes this year different from others: The celebrations to mark Singapore's 50th birthday, with higher spending expected.
In previous milestone years, there were one-off items such as the Growth Dividends given out in Budget 2011.
Mr Song said widely expected special transfers and bonuses related to Singapore's 50th birthday could result in a small deficit in the coming year.
Ms Ling said the upcoming Budget, which will be delivered on Feb 23, "will certainly have an SG50 theme, with consideration for the upcoming election too".
Budget 2015 is expected to retain its focus on economic restructuring and strengthening social safety nets, said DBS economist Irvin Seah, who anticipates a " 'people's Budget', heavy on social initiatives".
And if elections are called this year, this could affect how much the Government will spend. Since surpluses earned in one term of government cannot be carried over to the next term, the Government may choose to spend its surpluses if its term is due to end this year.
That will add another element of uncertainty to predicting the Budget position.
Mr Seah said: "Is it going to be an election Budget? No one knows. But I do think it will reflect a celebratory mood at the country's 50th birthday - a good time to share with Singaporeans the fruits of economic success."