He turns 60 on March 3.
The difference between the government’s estimate and the eventual surplus reflects Singapore ’s exposure to global profit cycles, said one economist. -- ST PHOTO: LIM YAOHUI SINGAPORE : Singapore ’s unexpectedly large budget surplus of S$15.
1 billion for 2025 reflects increasing volatility in the global economy, said economists. They added that the Government had underestimated its revenue streams with the economy performing better than projected. Such windfall surpluses should be funneled back into society, said MPs, who called for more to be done to tackle longer-term challenges such as wealth inequality and upgrading estates. The surplus, which is equal to 1.9 per cent of gross domestic product , was more than twice the $6.8 billion that the Government had estimated last year. Delivering Budget 2026 on Feb 12, Prime Minister and Finance Minister Lawrence Wong said this was driven by better-than-expected economic performance in 2025, where the economy bucked earlier forecasts and grew 5 per cent. This indicates the surprise surplus – one of the largest in recent history – was driven by an unexpected and volatile increase in revenue rather than more conservative public spending, said National University of Singapore economist Chia Ngee Choon. OCBC chief economist Selena Ling noted that corporate income tax, a large component of the increase in revenue, hit 4 per cent of GDP – higher than the traditional 3 per cent. Tax takings from this category were revised upwards by $2.57 billion, noted Associate Professor Chia, who added that this reflects strong profitability in finance, tech, commodities trading and of Singapore as a hub for multinational firms. Higher collections from other areas such as vehicle quota premiums and stamp duty also contributed to the larger surplus. The upward revision also indicates that the Government was initially conservative in its estimates and anticipated global uncertainty with a moderate outlook on growth, she said. The difference between the government’s estimate and the eventual surplus reflects Singapore’s exposure to global profit cycles, she said. “The fiscal ‘missed marksmanship’ arises mainly from under-forecasting volatile revenue streams rather than spending control.” She added that the key policy implication is that such surpluses may represent “cyclical windfalls” – which means they are the result of transient rather structural changes to the economy. The last time Singapore recorded such a large surplus by proportion of GDP was 2017 – when there was a $10.9 billion coming in at 2.1 per cent of GDP, said OCBC’s Ms Ling.Instead, it was due to a sharp upward revision in contributions from statutory boards, exceptional contributions from the Monetary Authority of Singapore and higher stamp duty collections due to a property market pick-up, said NUS’ Prof Chia. While the takings from the 2025 financial year will have to go into Singapore’s past reserves as they are from the previous term of government, investment income from that pool contributes to future budgets. Bukit Panjang MP Liang Eng Hwa said surpluses create “fiscal room” to tackle immediate and medium-term challenges, and that it is prudent for the Government to keep some “fiscal dry powder” to deal with external shocks. He suggested several areas where the funds can flow, including additional public transport subsidies to moderate fare hikes and more support for businesses to cope with rising wage costs associated with salary increases for low-wage workers. He also called for more grants to upkeep ageing estates in areas like seepage repairs and to provide barrier-free access, as well as higher subsidies for flats which still do not have lift access. Sengkang GRC MP Jamus Lim raised concerns about what he called the Government’s “poor fiscal marksmanship” – an issue the WP also raised at the 2025 Budget debate after the Government adjusted its surplus for 2024 up from $778 million to $6.4 billion. Associate Professor Lim said these surpluses have occurred in an environment where the Government is expanding revenue sources – pointing to the increase in goods and services tax from 7 to 9 per cent in 2023 and 2024, which the WP opposed, and the new 20 per cent import tax on tobacco announced at Budget 2026. He said that while the WP agrees that fiscal buffers are important, that is the role of the national reserves. “But if a government consistently runs surpluses, it becomes natural to question if it should be taxing as much as it is to begin with, or if it is failing to spend as much as needed to help offset cost of living pressures.” Jalan Besar GRC MP Shawn Loh said he hopes the Government can provide Singaporeans with more assurance that there will be no major revenue raising moves for the next 10 years. He added that the current surplus should give the Government the opportunity and confidence to tackle structural challenges such as wealth inequality, poverty among the elderly and worker training amid job disruption.Globally, most countries are running budget deficits, said NUS senior lecturer Chan Kok Hoe – although comparisons between different national budgets is difficult because of differences in computation. Exceptions to the trend include states with a large finance sector such as Switzerland, petro-states like Kuwait and Qatar, and small export-driven developed economies like Denmark or Ireland. In Singapore, the Government has to balance its Budget over its term, and accumulated surpluses at the end of a term – which is typically five years – are locked up as part of the reserves, said OCBC’s Ms Ling. It has projected a surplus of $8.5 billion for 2026, which should bode well for future years should there be a downturn that requires stimulus, she added. But fiscal planning will soon enter a period of higher uncertainty as more measures related to a global agreement to raise corporate taxes – which Singapore is party to – will affect collections from 2027. Whether Singapore’s surpluses will continue will depend on how fast, or slow, economic growth will be in the coming year, noted UOB head of research Suan Teck Kin. Due to Singapore’s small size, open nature, and other constraints, its fiscal position and changes to its reserves – and hence its fiscal performance – are directly tied to global economic performance, he said. Its exceptional economic performance in 2025 was driven by strong external demand as companies responded to US tariff changes as well as AI-related investments, he noted. “That outperformance translated to stronger corporate profits and higher incomes that enabled the unexpectedly strong fiscal position.” Mr Loh, a former Budget director who is now group managing director at Commonwealth Capital Group, said a rule of thumb fiscal planners used to follow was to expect corporate income tax collections to be around 3 per cent of GDP. But this has now gone beyond 4 per cent of GDP, a significant increase of about $10 billion, and the rule of thumb should be updated. He said the collections have been higher since the Covid-19 pandemic, which reflects an increase in the “Singapore premium”. This is the premium of stability and security that Singapore offers in a more unpredictable and dangerous world, he said. “It is the direct result of past Budgets, which invested in economic infrastructure as well as long-term security infrastructure. Our defence spending is consistently around 3 per cent – more than many NATO countries.” -- The Straits Times/ANNIndonesian woman found dead in Banting plantationKing and Queen extend Chinese New Year greetings
Budget Surplus Global Economy Revenue Streams Wealth Inequality Lawrence Wong Economic Performance Corporate Income Tax Fiscal Planning National Reserves
Malaysia Latest News, Malaysia Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Sultan Ismail Petra Airport in Kelantan to Resume Full Operations on March 5thThe Sultan Ismail Petra Airport (LTSIP) in Pengkalan Chepa, Kelantan is expected to fully resume operations on March 5th, following the completion of phase two construction. This was announced after a site visit by the Deputy Chairman of the State Committee on Public Works, Infrastructure, Water, and Rural Development, Saizol Ismail. Delays were caused by technical issues with the baggage handling system. Full operations are anticipated to accommodate the surge in passenger movement during the upcoming Aidilfitri festive season, and there is hope for increased international destinations.
Read more »
US Intercepts Oil Tanker Violating Sanctions; Regional Black Magic Thriller 'Kong Tao' to Release March 19The US military intercepted an oil tanker, the Veronica III, in the Indian Ocean for violating sanctions, while the black magic thriller 'Kong Tao' featuring Bront Palarae and Yumi Wong is set for release on March 19.
Read more »
Apple Plans Low-Cost MacBook Launch in March 2026Apple is reportedly planning to release a cheaper MacBook in March 2026, targeting students and enterprise users. The laptop will use the A18 Pro chip, feature compromises in areas like ports and display, and come in new colors including light yellow, green, blue, and pink, as well as silver and dark grey. It will use a new manufacturing process for the aluminum shell to maintain a premium feel.
Read more »
Reminder: MyDigital ID To Be Sole Login Method For MyJPJ Starting March 2026JPJ has issued a notice to users, reminding them of the upcoming enforcement of MyDigital ID as the sole login method for the MyJPJ app.
Read more »
China embassy in Singapore warns its citizens against gambling after MBS casino deathSINGAPORE, Feb 16 — The Chinese embassy in Singapore has urged its citizens to avoid gambling, following the death of a Chinese national at the Marina Bay Sands casino.According...
Read more »
Nepal to Vote on March 5 Amidst Anti-Corruption ProtestsNepal will hold elections on March 5 to elect a new House of Representatives. The vote follows youth-led anti-corruption protests and is set against a backdrop of economic hardship, overseas remittances, and regional influence, with young voters pushing for reform. Veteran leaders face challenges from Gen Z activists and media personalities.
Read more »