SINGAPORE’S DISTINCTIVE BUDGET FRAMEWORK
Besides transparency and accountability, an effective budget should be aligned with national priorities, including societal values and citizen aspirations. In particular, it should reflect a considered balance between the needs of current and future generations. Finally, the budget process should foster close coordination across public agencies in delivering the government’s agenda.
Singapore’s budgeting framework has distinctive features, including recent enhancements, that address each of these objectives. While the system has served us well thus far, it must continue to evolve and innovate in the face of emerging challenges.
The annual Budget is guided by societal values and aspirations distilled from national consultations, which a recent OECD paper titled Budgeting In Singapore In 2025 describes as a “uniquely Singaporean process”. For instance, findings from the Forward Singapore exercise in 2022-203 has helped inform Budget measures in areas such as child development, employment and retirement.
Finance Minister Lawrence Wong in his 2024 Budget speech stated that the Budget would roll out the “first instalment” of Forward Singapore programmes.
Indeed, Forward Singapore has set out medium- to longer-term objectives that will take at least several Budgets to address. It is therefore important to take stock of the cumulative impact of several Budgets on each priority area, rather than focus on what a single Budget delivers.
Intergenerational fairness is another key consideration for budget planning and budgeting rules. For instance, excessive borrowing to finance current spending can lead to a significant debt burden on future generations. Borrowing aside, pension liabilities may have a similar impact.
In Singapore, constitutional rules limit the amount that the government can spend from the investment income generated from the national reserves. The intent is to have the reserves grow at approximately the same pace as the economy, so that future generations can continue to benefit from it to the same extent.
The balance between current and future spending requires constant recalibration. For many years, the government has financed major infrastructure projects from current taxes and revenues. However, with the fiscal space tightening, it introduced a Significant Infrastructure Government Loan Act in 2018 that permits borrowing for long-term, nationally significant infrastructure. This supports intergenerational fairness by sharing the cost of financing with future generations who would benefit from the infrastructure.
The multifaceted nature of many challenges such as population ageing, technological disruption and climate change requires public agencies to work closely together to achieve policy objectives. Budgetary processes should incentivise and encourage such collaboration.
The Ministry of Finance has introduced joint budgets to foster greater cross-agency collaboration with a view to rationalising efforts and enhance accountability for shared outcomes. Rather than park large resource buffers within each ministry or agency, the ministry is retaining more resources for reallocation to the areas of most pressing need. This gives the government greater agility to meet new and emerging challenges.
These budgetary innovations build on a strong budgeting framework set out in law and established practice. The OECD paper on Budgeting In Singapore In 2025 recognises that Singapore has made “successive changes to its Budget framework” and reformed the way this framework has been applied.
As Singapore plans ahead for future expenditure needs and revenue sources, the Budget framework itself must continue to transform to support the country’s needs.
Terence Ho is Associate Professor in Practice at the Lee Kuan Yew School of Public Policy. He is the author of Future-Ready Governance: Perspectives on Singapore and the World (2024).