SINGAPORE: Singapore is unveiled a budget yesterday that seeks to chart its post-pandemic future, focusing on rebuilding finances to face long-term challenges such as rising health-care costs as the local workforce ages.

       In detailing spending priorities for the year starting April 1, Finance Minister Lawrence Wong announced early in his speech a S$500mil (US$372mil or RM1.6bil) package of jobs and business support to help sectors still struggling to recover, as well as an extension of some aid programmes.

       Singapore’s closely watched annual budget typically showcases how it balances an open and prosperous economy – which relies heavily on free trade and overseas labour – with satisfying a local population whose approval has kept the ruling People’s Action Party in power since independence in 1965.

       Singapore is seeking to restore its finances after committing about S$100bil (RM312bil) toward Covid-related spending over the previous two years – which required it to dip into reserves - and posting budget deficits over the previous two years.

       “The challenge is to normalise the budget while at the same time ensuring the recovery is on track, as well as keeping a lid on inflationary pressures,” said Trinh Nguyen, a Hong Kong-based senior economist at Natixis SA.

       The government will need to find a way to return to surplus by withdrawing some support, but without tightening spending so much that it hurts consumption, she added.

       With the Covid-19 situation in the city stabilised, Singapore announced plans earlier this week to further reopen its economy and woo back travellers and foreign labour. It also will ease social-distancing measures that have kept cases and deaths relatively low throughout the pandemic.

       The benchmark Straits Times Index has been one of the world’s best performing stock indices this year, having gained about 10%. It traded down 0.3% as of 3:52pm local time yesterday.

       The trade ministry on Thursday reaffirmed expectations for gross domestic product to grow 3%-5% this year, which Wong reiterated in his speech.

       While export-oriented sectors like manufacturing and trade will remain strong, the ministry flagged risks from a possible slowdown in global demand and the impact on aviation and tourism-related sectors from Covid-19 outbreaks.

       Inflation also has surged in recent months. That has driven the central bank to tighten monetary policy twice in the last four months, including an off-cycle move in January after the highest headline inflation reading in eight years. — Bloomberg