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Singapore's aged in line for pre-election budget bonus

Reuters  |  SINGAPORE 

By John Geddie

(Reuters) - Singapore's elderly are primed to benefit from a generous budget unveiled next week, analysts say, as the government prioritises the needs of a fast-ageing population ahead of an election expected as soon as this year.

As pressure grows on more of the elderly to stay in the workforce beyond retirement age, the is set to try and assuage rising social angst over the welfare of a generation born near the end of British colonial rule when was a basic port town.

The Feb 18. budget, due to be delivered by Heng Swee Keat, will be his first since he was picked last year as the likely next of the People's which has governed the affluent city-state for over half a century.

"Expectations are for a spending spree ahead of a reported early election later this year," said Lynch's ASEAN

must hold its next by early 2021, but Lee Hsien Loong, eyeing retirement, has suggested it could be this year.

Analysts say other highlights of the budget for fiscal year 2019 that begins April 1 will likely include increased security spending given a recent high-profile cyber attack, maritime tensions with and plans to acquire fighter jets. A new sugar tax, higher alcohol levies and more are also seen as possibilities.

"AMPLE ROOM"

While Singapore budgeted for a small deficit in fiscal year 2018, analysts at Maybank said their estimates for an accumulated S$19 billion fiscal surplus over the last three years provides "ample room for more social spending".

Other analysts say increased spending is also needed to tackle heightened external pressure on the economy, including from the U.S.-Sino trade war and Britain's imminent departure from the

"Notwithstanding the prospect of a pre-election budget, the need remains for Singapore to stay business relevant and education supportive amidst the ongoing uncertainties in the global economic space," said, adding the budget needs "to lean towards an expansionary stance."

Schemes to retrain and upskill workers, especially older staff and those facing technological disruption, will also likely feature in the budget, analysts say.

Giveaways to households, direct or through rebates, historically occur before elections. But the government has marked Singaporeans born in the 1950s - the so-called Merdeka or 'Independence' generation - for special treatment this year.

With the second-fastest ageing population in the world after South Korea, Singapore is growing more reliant on older residents staying in the workforce beyond retirement age as birth rates fall and foreign labour is restricted.

But many complain the government's retirement savings scheme does not provide enough money in a country often ranked as the world's most expensive and where life expectancy is close to 83 - the third highest globally.

Ahead of the 2015 election - which the PAP won comfortably - a "Silver Support" scheme was introduced to provide regular payouts to low income pensioners, while a S$9 billion "Pioneer" scheme was unveiled for all Singaporeans born in 1949 or before to help meet their

Analysts think a similar amount will be set aside for the Merdeka generation - in what Maybank in a note said would be the "centrepiece" of the fiscal 2019 budget.

While the welfare needs of its ageing population has put a strain on Singapore's low tax model, little is expected in terms of tax changes given last year's announcement that goods and services taxes (GST) will increase between 2021 and 2025.

However, with a so-called 'tax' on digital services set to come in next year, some analysts expect imports of to soon be taxed as purchases on the likes of and Alibaba's platforms surge.

A sugar tax - already adopted in France, Britain, and the - is also seen as a possibility given Singapore's high rates of diabetes, as is another increase in alcohol tax which was last raised five years ago.

(Reporting by John Geddie; Editing by Shri Navaratnam)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, February 11 2019. 09:23 IST
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