$15.1b budget surplus reflects uncertain economy, cyclical windfalls: Economists

MPs said such surpluses should be funneled back into society, and used to tackle long-term challenges. $15.1b budget surplus reflects uncertain economy, cyclical windfalls: EconomistsSign up now: Get ST's newsletters delivered to your inboxThe difference between the government’s estimate and the eventual surplus reflects Singapore’s exposure to global profit cycles, said one economist.ST PHOTO: LIM YAOHUINg Wei KaiPublished Feb 16, 2026, 07:23 PMUpdated Feb 16, 2026, 07:30 PMSINGAPORE - Singapore’s unexpectedly large budget surplus of $15.1 billion for 2025 reflects increasing volatility in the global economy, said economists. They added that the Government had underestimated its revenue streams with the economy performing better than projected.Such windfall surpluses should be funneled back into society, said MPs, who called for more to be done to tackle longer-term challenges such as wealth inequality and upgrading estates. The surplus, which is equal to 1.9 per cent of gross domestic product (GDP), was more than twice the $6.8 billion that the Government had estimated last year.Delivering Budget 2026 on Feb 12, Prime Minister and Finance Minister Lawrence Wong said this was driven by better-than-expected economic performance in 2025, where the economy bucked earlier forecasts and grew 5 per cent.This indicates the surprise surplus – one of the largest in recent history – was driven by an unexpected and volatile increase in revenue rather than more conservative public spending, said National University of Singapore economist Chia Ngee Choon.OCBC chief economist Selena Ling noted that corporate income tax, a large component of the increase in revenue, hit 4 per cent of GDP – higher than the traditional 3 per cent.Tax takings from this category were revised upwards by $2.57 billion, noted Associate Professor Chia, who added that this reflects strong profitability in finance, tech, commodities trading and of Singapore as a hub for multinational firms.Higher collections from other areas such as vehicle quota premiums and stamp duty also contributed to the larger surplus.The upward revision also indicates that the Government was initially conservative in its estimates and anticipated global uncertainty with a moderate outlook on growth, she said. The difference between the government’s estimate and the eventual surplus reflects Singapore’s exposure to global profit cycles, she said. “The fiscal ‘missed marksmanship’ arises mainly from under-forecasting volatile revenue streams rather than spending control.”She added that the key policy implication is that such surpluses may represent “cyclical windfalls” – which means they are the result of transient rather structural changes to the economy.The last time Singapore recorded such a large surplus by proportion of GDP was 2017 – when there was a $10.9 billion coming in at 2.1 per cent of GDP, said OCBC’s Ms Ling. But the jump then was not due to an inaccurate judgment of corporate tax incomes.Instead, it was due to a sharp upward revision in contributions from statutory boards, exceptional contributions from the Monetary Authority of Singapore and higher stamp duty collections due to a property market pick-up, said NUS’ Prof Chia. While the takings from the 2025 financial year will have to go into Singapore’s past reserves as they are from the previous term of government, investment income from that pool contributes to future budgets.Bukit Panjang MP Liang Eng Hwa said surpluses create “fiscal room” to tackle immediate and medium-term challenges, and that it is prudent for the Government to keep some “fiscal dry powder” to deal with external shocks.He suggested several areas where the funds can flow, including additional public transport subsidies to moderate fare hikes and more support for businesses to cope with rising wage costs associated with salary increases for low-wage workers.He also called for more grants to upkeep ageing estates in areas like seepage repairs and to provide barrier-free access, as well as higher subsidies for flats which still do not have lift access.Sengkang GRC MP Jamus Lim raised concerns about what he called the Government’s “poor fiscal marksmanship” – an issue the WP also raised at the 2025 Budget debate after the Government adjusted its surplus for 2024 up from $778 million to $6.4 billion. Associate Professor Lim said these surpluses have occurred in an environment where the Government is expanding revenue sources – pointing to the increase in goods and services tax from 7 to 9 per cent in 2023 and 2024, which the WP opposed, and the new 20 per cent import tax on tobacco announced at Budget 2026.He said that while the WP agrees that fiscal buffers are important, that is the role of the national reserves.“But if a government consistently runs surpluses, it becomes natural to question if it should be taxing as much as it is to begin with, or if it is failing to spend as much as needed to help offset cost of living pressures.”Jalan Besar GRC MP Shawn Loh said he hopes the Government can provide Singaporeans with more assurance t