Singapore announces budget increase for 2021

The government of Singapore announced on 16 February a 2021 defence budget of SGD15.36 billion (USD11.56 billion).

The new allocation, which amounts to about 15% of total government outlay for the year, is a 12.7% increase over the revised 2020 defence budget of SGD13.63 billion but just a 1.8% increase compared to the original 2020 expenditure of SGD15.08 billion.

The government made no reference to the cuts in the 2020 defence expenditure, but indicated they were linked with rising economic headwinds, specifically the Covid-19 pandemic.

In his budget speech Singapore’s finance minister Heng Swee Keat said that during 2020 the city-state’s GDP contracted 5.4% and that the government had set aside an SGD11 billion Covid-19 resilience package supporting local businesses.

In terms of the defence budget, Singapore splits funding over two expenditures, operating and development, with the majority of funding allocated to the former.

Budget documents issued by the finance ministry showed that the operating expenditure for 2021 has been allocated SGD14.80 billion, an 11% increase over the revised and downsized 2020 appropriation of SGD13.35 billion.

Nearly all of Singapore’s 2021 operating expenditure – SGD14.74 billion - is ringfenced for funding known only as “military expenditure”, which is thought to include spending for military procurement, operations and maintenance, and personnel allowances.

The development expenditure for 2021 is allocated SGD557.7 million, which is double the revised 2020 development appropriation. This funding is thought to support fixed-asset construction and development projects.

The Singapore Armed Forces (SAF) modernisation plans through to 2030 were detailed in a roadmap unveiled by the government in 2019.