SINGAPORE - Budget 2024 is an impressive attempt by the Government to gear up businesses and individuals for an economy that may gradually change beyond recognition because of developments such as artificial intelligence (AI), climate change and population ageing, said panellists at a discussion on Feb 17 organised by the Economic Society of Singapore (ESS).

Some of the economists, however, expressed concerns about the sustainability of the effort – bunched together with large cash handouts for various sections of the society – amid what they perceived as a lack of information about the source of Singapore’s fiscal strength.

While questions were also raised about the effectiveness of a plethora of support packages in the Budget, most of which have been up and running for years, the consensus was that thanks to some of those handouts and schemes, Singapore has been able to uplift the standard of living of its citizens, and the economy is still an attractive destination for investment.

“The Budget is forward-looking, yet takes care of immediate needs. So I would say that it is a targeted Budget, yet inclusive,” said Dr Chia Ngee Choon, associate professor of economics at the National University of Singapore.

Speaking at the discussion held at Voco Orchard Singapore, she said budgets in Singapore have always tended to target the growth of the economic pie and it had so far worked.

Dr Chia noted that in Budget 2011, then Finance Minister Tharman Shanmugaratnam, who is now Singapore’s president, set a goal to raise the real income of all Singaporeans by 30 per cent in a decade. She said that target was almost achieved before the Covid-19 pandemic broke out in 2020.

However, she also noted that Singapore’s management of fiscal balance – the difference between revenues and expenditures – is unique as it does not follow standards set by global bodies such as the International Monetary Fund.

Associate Professor Walter Theseira, a labour economist from the Singapore University of Social Sciences and a council member of ESS, said there is no doubt that Singapore has managed to fund its expenditures remarkably well.

He said that most of the social spending – which includes health, education and eldercare expenses – comes from a long list of endowment and trust funds established over the past several years that receive special transfers and top-ups annually.

“So my questions are: What is actually known about the use of the Government pre-funding system for government programmes, and what are the implications of pre-funding for the reserves? And how would this affect our ability to analyse and understand what the Government is doing right?” he asked.

Also, the Government reports as expenditures the top-ups to all of these funds, but does not report in the Budget the drawdowns from these funds, he noted.

He asked the Government to provide more information on how it funds its expenditures.

Mr Manu Bhaskaran, chief executive and founding director of Centennial Asia Advisors, who is also the vice-president of ESS, said that while social spending is already rising fast, it is likely that eldercare in an ageing society and climate change will continue to take a substantial portion of savings in the coming years.

Still, he noted that Singapore’s reserves will grow as a result of substantial current account surpluses each year.

These would flow into the Monetary Authority of Singapore’s (MAS) foreign exchange reserves, and part of these is then given to sovereign wealth fund GIC to invest worldwide. GIC also manages Singapore’s past reserves.

The Government can then draw up to 50 per cent of the long-term expected real returns on the relevant assets of GIC, MAS and Temasek under the net investment returns contribution framework.

However, the amount of past reserves is not announced.

Mr Bhaskaran said more information about the size of the reserves is needed so that experts can estimate how much is needed during emergencies.

“As a society, we now have some very important choices to make, and unless we are well informed, we will not be able to make those choices well.”

Associate Professor Laura Wu, an economist from Nanyang Technological University, applauded the Government’s initiatives such as giving mid-career workers a $4,000 top-up of SkillsFuture credits to refresh their skills and progress in their careers.

Singaporeans aged 40 and above will also be given subsidies to pursue another full-time diploma at polytechnics, the Institute of Technical Education and arts institutions from the academic year 2025.

Prof Wu said that with AI likely to reconfigure the skills required by workers worldwide, such initiatives were much needed.

But she said institutions of higher learning will have to make their own effort to encourage lifelong learning, while government agencies will have to look at how to improve the take-up of their upskilling and reskilling programmes.