Singapore faces a 'delicate balancing act' amid weak economy and inflation, says deputy PM

SINGAPORE — Setting Singapore's fund was challenging this year, arsenic it required a "very delicate balancing act" to guarantee fiscal prudence portion helping Singaporeans woody with rising costs, Finance Minister Lawrence Wong told CNBC successful an exclusive interview.

"It's peculiarly challenging this year, because it truly was a precise delicate balancing enactment to negociate owed to the antithetic competing demands and pressures," Lawrence Wong, who is besides lawman premier minister, said Wednesday, a time aft announcing Singapore's budget to Parliament.

"On the 1 hand, you had to effort and get our fiscal presumption to a much sustainable one, particularly aft spending truthful overmuch during Covid. But yet, we can't taper down excessively quickly, due to the fact that the system is inactive weak," Wong told CNBC's Martin Soong connected "Squawk Box Asia."

Singapore expects a flimsy shortage of $2 cardinal Singapore dollars ($1.5 billion), oregon 0.3% of GDP, for fiscal twelvemonth 2022. Wong said during the code connected Tuesday afternoon. That's narrower than the erstwhile estimation of S$3 billion.

"And due to the fact that of inflation, galore radical privation assistance with outgo of surviving measures. And yet astatine the aforesaid time, if you bash excessively overmuch connected outgo of living, you whitethorn inadvertently propulsion up ostentation and substance demand," Wong said. "So however bash you find the saccharine spot?"

To assistance Singaporeans header with ostentation and the caller taxation hikes connected goods and services, helium pledged an further S$3 cardinal ($2.26 billion) connected apical of the S$8 cardinal for the enactment package previously pledged successful 2022.

"In the end, we've tried to bash that by tapering it down. It's inactive a deficit, but overmuch smaller, and focusing connected groups that truly request them," the curate said, highlighting the request to prioritize economical competitiveness, helping families — particularly those successful little income groups.

On Tuesday, Wong acknowledged that 2022 was a "year of brutal ostentation worldwide" arsenic pressures from rising costs of surviving proceed to measurement connected the economy. Singapore's system grew 3.6%, slower than the 7.6% maturation successful 2021.

"Our system has recovered backmost to pre-Covid levels, but our fiscal presumption is inactive rather weak, and it is inactive precise tight," Wong told CNBC.

"That's wherefore we are precise improbable to beryllium capable to enactment backmost the reserves that we had drawn for this Covid-19 crisis."

Singapore volition not beryllium drafting down connected past reserves this year, it was revealed astatine the fund speech.

"Given the precise choky fiscal context, we person to prioritize and measures successful the fund are truly meant to amended presumption Singapore, our system and our nine for a aboriginal that we deliberation volition beryllium much uncertain," added Wong.