Budget 2026: Govt expects to end FY2025 with $15.1b surplus, more than double the estimate

SINGAPORE – Singapore’s national coffers have been bolstered by a revenue outperformance in fiscal year (FY) 2025, led by better-than-expected economic growth and higher corporate income tax and asset-related takings, Prime Minister Lawrence Wong said

in his Budget speech on Feb 12

.

The Government expects to end FY2025 – from April 1, 2025, to March 31, 2026 – with an overall fiscal surplus of $15.1 billion, or 1.9 per cent of gross domestic product (GDP), he said. This is more than double the surplus of $6.81 billion estimated.

Total FY2025 revenue – which includes operating revenue plus the Net Investment Returns Contribution (NIRC) – was revised to $158.39 billion, or 19.8 per cent of GDP.

This is $8.48 billion more than what was estimated, the Ministry of Finance (MOF) said.

The size of the revised FY2025 Budget was $143.29 billion, or 17.9 per cent of GDP.

This is up $190 million from the estimate.

MOF said operating revenue – which consists mostly of tax collections and fees – for FY2025 was $130.86 billion, representing 16.3 per cent of GDP, and $8.08 billion above the estimate.

The increase was mainly due to higher collections from corporate income tax, vehicle quota premiums, other taxes (land betterment charge and annual tonnage tax), stamp duty and statutory boards’ contribution.

At $35.24 billion, corporate income tax was the single largest contributor to operating revenue, due to stronger-than-expected economic growth in 2024.

Singapore’s economy grew 4.4 per cent in 2024

, beating forecasts and an earlier estimate.

Personal income tax in FY2025 was revised to $20.64 billion, while the goods and services tax was $21.3 billion. 

Collections from vehicle quota premiums – the amounts motorists pay for certificates of entitlement under Singapore’s vehicle quota system – were 31.1 per cent above what was estimated, at $8.66 billion, due mainly to higher-than-expected premiums. 

Collections from other taxes were nearly 68 per cent above the estimate, at $3.98 billion, due to higher-than-expected land betterment charge collections.

The land betterment charge is a tax in Singapore levied on landowners when planning permission is granted for development or when land value increases due to improved use.

Stamp duty collections were 14.8 per cent higher than estimated, at $6.8 billion, due to higher-than-expected government land sales and increased activity in the private property market. 

Statutory boards’ contribution collections were revised to $840 million, $430 million more than estimated, due to statutory boards having higher income and lower-than-expected expenses. 

MOF said the revised FY2025 operating revenue made up 82.6 per cent of total revenue.

Operating expenditure – which refers to daily expenses necessary for running government functions – was revised to $97.47 billion, 0.5 per cent above what was estimated, mainly due to the Ministry of Home Affairs (MHA) and Ministry of Manpower (MOM).

MHA incurred higher expenditure on manpower and higher operating grants to the Home Team Science and Technology Agency.

MOM’s operating expenditure was higher than estimated, owing to higher requirements for social support schemes including the Workfare Income Supplement Scheme and Matched Retirement Savings Scheme.

The Ministry of Health bucked the trend with lower-than-estimated operating expenditure, due mainly to lower-than-projected funding needs for public healthcare institutions. 

Special transfers to households were revised to $3.43 billion in FY2025.

This comprised $2 billion for SG60 vouchers, $1.07 billion for CDC vouchers, and $360 million for other transfers.

Top-ups to statutory and trust funds – mostly the Changi Airport Development Fund, Coastal and Flood Protection Fund, Future Energy Fund and National Productivity Fund – remain at $19.6 billion.

The NIRC – a major contributor to the Government’s coffers – was revised to $27.53 billion in FY2025. This is 1.5 per cent higher than estimated, and made up 17.4 per cent of total revenue. 

For FY2026, PM Wong expects a smaller surplus of $8.5 billion, or 1 per cent of GDP.

“Our approach remains to keep the budget balanced over time, and across the ups and downs of the economic cycle,” he said, adding that Singapore’s public finances remain sound and resilient.

He expects collections from corporate income tax to grow from FY2027 as the effective tax rate for large multinational enterprises operating here will rise to 15 per cent in line with a global minimum tax initiative by the Organisation for Economic Cooperation and Development. 

Spending needs are expected to grow too, as Singapore will need to invest more to expand its overseas partnerships and for security.

PM Wong anticipates that the Ministry of Trade and Industry’s expenditure will stay elevated as it strengthens its investment promotion toolkit to keep Singapore attractive to investors.

Spending for healthcare and other social needs is also projected to rise, along with that for critical infrastructure needs.

Dr Chua Hak Bin, regional co-head of macro research at Maybank, said the Government is maintaining a prudent fiscal surplus of 1 per cent of GDP for FY2026 in the first year of the new electoral term.

This allows it to preserve some dry powder to draw upon in the event of any unexpected shock or downturn, Dr Chua said.

DBS Bank senior economist Chua Han Teng said the first fiscal plan of the new term of government “strikes a balance between calibrated, targeted policy support and fiscal discipline”.

He noted that the Government’s budgeted overall fiscal surplus of $8.5 billion for FY2026 “marks the third consecutive year of surplus, extending the positive public financial performance of recent years, even amid increased focus on various spending priorities”.

As a share of GDP, total revenues will continue to outstrip total spending, Mr Chua said.

Based on the actual fiscal results from FY2021 to FY2024, and the much higher revised surplus of $15.1 billion for FY2025, the economist estimates that the Government would have built up a cumulative Budget surplus of about $22.3 billion over its previous term.

“This reflects Singapore’s robust and resilient economic performance despite global turbulence,” he said.

“Healthy public finances and fiscal strength remain a key competitive advantage, providing the crucial policy space to deliver bold, strategic plans to navigate the significant shifts in an increasingly complex global environment.”

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