Singapore’s unexpectedly large budget surplus arises from tough decisions to raise taxes earlier and means that the country is now in a position of strength, Prime Minister Lawrence Wong has said, after MPs questioned the accuracy of his government’s budget forecasts.
Earlier this month, Wong revealed in his budget statement that Singapore expected a surplus of S$15.1 billion (US$12 billion), or 1.9 per cent of gross domestic product, for the 2025 financial year ending March, more than double an initial projection of S$6.8 billion and one of the country’s largest surpluses in recent history. He attributed the surplus to a bumper crop in corporate tax revenue.
Workers’ Party MPs have questioned why the increase in the goods and services tax (GST) in stages from 7 to 9 per cent in 2023 and 2024 was necessary in light of the surplus, noting that the surplus for the next financial year would likely be S$8 billion.
The government had previously said it expected to have to spend more, particularly on healthcare, due to the country’s ageing population.
WP chief Pritam Singh noted on Tuesday that the S$8 billion surplus for the 2026 financial year exceeded the $2 billion to $3 billion in additional revenue that the tax hikes were projected to generate. Fellow Aljunied MP Gerald Giam argued the consistent underestimation of the annual surplus raised questions about “unnecessarily hoarding funds”.
Responding to MPs on Thursday, Wong outlined the difficulty in forecasting projections in an open economy like Singapore’s but assured MPs that the approach was responsible and professional.