(Reuters) - Singapore unveiled an expansionary budget for the next financial year on Monday, setting aside S$6.1 billion for the welfare of its elderly in a generous package before an election expected as soon as this year.
Finance Minister Heng Swee Keat also announced a S$1.1 billion bonus package for all Singaporeans to mark 200 years since the former British colony’s founding, that includes vouchers, a cash bonus for lower income workers and income tax rebates for the middle class.
The government finance for the 2019 fiscal year that begins April 1 is expected to turn to a deficit of S$3.5 billion, after a predicted surplus of S$2.1 billion for the 2018 fiscal year.
The budget proposal comes after data showed Singapore’s economy grew at its slowest pace in more than two years in the fourth quarter, and its trade ministry warned that manufacturing is likely to face significant moderation this year.
Analysts have said stronger fiscal impulse will also be needed to tackle heightened external pressure on the economy, including from the U.S.-Sino trade war and Britain’s imminent departure from the European Union.
Singapore must hold its next general election by early 2021, but Prime Minister Lee Hsien Loong, eyeing retirement, has suggested it could be this year.
“The Merdeka Generation Package is a gesture of our nation’s gratitude for their contributions and a way to show care for them in their silver years,” said Heng, who been tapped to be the next leader of the People’s Action Party which has ruled the city-state for over half a century without interruption.
The so-called Merdeka, or “independence” generation refers to those born in the 1950s, near the end of British colonial rule. With the second-fastest aging population in the world after South Korea, and as pressure grows on more of the elderly to stay in the workforce beyond retirement age, the low-tax finance hub is facing rising social angst over the welfare of its aged.
Heng said about 30 percent of Singapore’s total budgeted expenditure for the 2019 fiscal year will support defense, security and diplomacy efforts and the quota for foreign workers in the services sector will be reduced in coming years.
Among other budget highlights was a hike in excise duty for diesel to 20 Singapore cents per liter from 10 cents with immediate effect. For all the highlights, click.
Reporting by John Geddie and Fathin Ungku; Editing by Shri Navaratnam