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Singapore’s Prime Minister Lawrence Wong has promised a package of cash handouts in his final budget before the country goes to the polls this year in an election likely to be fought largely on the issue of high living costs.
Wong, who presented the budget on Tuesday in his dual role as finance minister, warned that Singapore would suffer from rising tensions between the US and China, both big trading partners for the city-state.
“All these pressures will reshape the global economy and dampen prospects for global growth,” he said. “As a small and open economy, we will feel the impact.”
Wong said Singapore’s economy was projected to grow between 1 and 3 per cent this year, down from 4.4 per cent in 2024, with inflation expected to average between 1.5 per cent and 2.5 per cent.
Last month, the Monetary Authority of Singapore (MAS) eased monetary policy for the first time in four years amid expectations of trade turmoil after Donald Trump’s return to the US presidency and moderating domestic inflation.
Singapore — one of the most expensive countries in the world — is feeling the pressure of rising living costs, with citizens facing higher prices for housing, cars, groceries and healthcare.
Cost pressures are expected to be a critical issue in the upcoming election, which must be held by November. The People’s Action party has controlled Singapore since 1959, but saw its share of the popular vote fall to 61 per cent five years ago, a level close to the record low recorded in 2011.
Wong, who was elevated to become Singapore’s fourth prime minister in May, sought to head off opposition pressure by unveiling a series of budget giveaways.
These included S$800 (US$596) vouchers for every household, with additional assistance for utility bills for people living in social housing and credits for children and young adults. There were also incentives for families with more children in an effort to counter the country’s ageing population.
Wong also announced special S$600 handouts to Singaporeans over the age of 21 and S$800 for those over 60, in recognition of the country’s 60th anniversary. In addition, he said food vendors in the city-state’s famous hawker centres would receive S$600 in rent support.
Singapore’s stock market has struggled to attract new listings in recent years, with some of the country’s biggest companies opting to go public in the US instead of on their domestic exchange.
In response, the MAS launched a review of the stock market last summer, and reported its first recommendations last week.
Wong said he accepted the proposals to introduce tax incentives to convince more companies to list and for fund managers to invest in Singaporean companies.
Analysts have argued the tax incentives would have limited impact and that more fundamental moves to provide greater liquidity through allowing pension funds to invest in the market would provide a bigger boost to Singapore’s capital markets.
Wong said the government would step up assessment of the introduction of nuclear power to meet the needs of priority industries such as artificial intelligence, semiconductors and biopharmaceuticals manufacturing.
The budget comes a day after Pritam Singh, leader of the opposition Workers’ party, was found guilty on two charges of lying to parliament, relating to a 2021 inquiry into his former colleagues’ conduct.
Singh was fined S$7,000 for each offence, though he avoided losing his seat, which was a possibility if the fines had been more than S$10,000.
Singh said he would contest the upcoming general election. His legal team said it would appeal against the conviction and sentence.
Singapore’s electoral boundary commission was formed last month in a sign that the election could be called by Wong in the next few months.
