Singapore Forecasts Lower Budget Deficit

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Monday, Singapore's Finance Minister Tharman Shanmugaratnam said in his budget statement that economic growth is expected to be around 4.5% to 6.5% in 2010. The government now estimate a lower overall budget deficit of S$2.9 billion or 1.1% of GDP for fiscal year 2009 ending March 31 this year, compared with the S$8.7 billion deficit a year ago.

He told the Parliament that the government will commit S$1.1 billion a year over the next five years in the form of tax benefits, grants and training subsidies to support a combined, national effort to raise productivity.

The Budget 2010 will provide a major investment for this future, said Shanmugaratnam. The government's initiative to help enterprises and workers raise productivity will cost S$5.5 billion over the next five years alone, he said.

The government will provide tax incentives for businesses in all sectors to invest in upgrading their operations and creating new value. Shanmugaratnam said, first, a 'Productivity and Innovation Credit' will be introduced, which will provide significant tax deductions for investments in a broad range of activities along the innovation value chain.

Further, the government will create a National Productivity Fund for which the government targets to put S$2 billion. To start, the government will inject S$1 billion into the fund in 2010, which is expected to be able to support initiatives over the next five years.

The government also plans to gradually raise the foreign worker levies, and tighten the levy tiers that are based on the proportion of foreign workers in a company's workforce. The levy rates will be raised by between S$10 and S$30 for most Work Permit holders on July 1, 2010.

Monday, Singapore's Finance Minister Tharman Shanmugaratnam said in his budget statement that economic growth is expected to be around 4.5% to 6.5% in 2010. (Market News Provided by RTTNews)