SINGAPORE (Reuters) – Singapore Finance Minister Lawrence Wong said on Tuesday the government expects 2022’s budget deficit to be S$2 billion ($1.51 billion), or 0.3% of gross domestic product, down from a previous estimate of S$3 billion.
Wong, who was presenting the 2023 budget to parliament, said the city-state must brace for a period of higher inflation and that the government would help citizens and businesses weather the higher costs of living.
Singapore faces the prospect of a slowing economy amid inflationary pressures and rising interest rates.
Meanwhile, its expenditure is increasing largely pegged to healthcare, driven by its ageing population.
Wong said the government would enhance a support package to help Singaporeans offset a recent sales tax hike from S$6.6 billion ($4.97 billion) to S$9.6 billion.
The second step of a scheduled sales tax hike would go ahead as planned in 2024.
The sales tax will increase to 9% next January, after increasing from 7% to the current 8% on Jan. 1 this year.
Singapore’s 2023 core inflation is forecast at 3.5%-4.5% and headline inflation at 5.5%–6.5%.
Singapore’s key consumer price gauge rose 5.1% in December, while the core inflation rate – which excludes private road transport and accommodation costs – was unchanged from the rise in November.
For 2022 as a whole, core inflation averaged 4.1%, higher than the 0.9% recorded in 2021.
Meanwhile, headline inflation came in at 6.1% last year, up from 2.3% in 2021.
($1 = 1.3269 Singapore dollars)
(Reporting by Xinghui Kok, Chen Lin; Writing by Kanupriya Kapoor; Editing by Ed Davies)
