BUDGET 2026 AND BEYOND
When Budget 2026 is delivered on Feb 12, experts said they expect to hear largely familiar themes – support for families, funds to boost productivity and upgrade workers’ skills and continued plans to build up Singapore’s competitiveness as an economic hub.
But they also forecast some shifts, notably with regard to handouts, which they expect will not be as generous in Budget 2026.
After all, Singapore’s core inflation averaged at 0.7 per cent last year, down from 2.8 per cent in 2024. In its forecast for 2026, the Monetary Authority of Singapore said it expected core and headline inflation to be between 1 and 2 per cent.
“As inflation pressures ease, policy may shift toward more targeted assistance for households facing greater financial strain, alongside structural measures that support income growth and productivity,” said NTU’s Asst Prof Chua.
Furthermore, analysts also noted that this is the first Budget of this term of government.
“The government will likely be prudent in the first year of the new electoral term, preserving some dry powder to draw upon,” said Maybank economists Chua Hak Bin and Brian Lee in their Budget 2026 preview.
The Budget might also not include handouts as generous as those distributed during milestone years like SG50 and SG60, analysts noted.
That said, Asst Prof Chua said that the voucher-based delivery mechanism itself is likely to remain a feature of Singapore’s fiscal toolkit.
“Households are familiar with it, and it allows support to be deployed quickly with low administrative cost,” he said. “The more important adjustment is therefore likely to be in targeting rather than structure.”
Agreeing, Mr Lennon Lee, tax leader at professional services firm PwC Singapore, said that vouchers have the added benefit of channeling resources to specific national objectives with “the most immediate economic and social impact for Singapore” while helping households.
“For example, schemes like CDC vouchers help sustain footfall for heartland merchants, while also relieving cost-of-living pressures for households,” said Mr Lee.
Upon expiry, all unclaimed and undonated vouchers lapse, and the amount is returned to the government for other national schemes.
Mr Gee from IPS also pointed to recent allocations into endowment funds that are “clearly investing into the future”.
He cited as an example the S$5 billion top-up last year to the Changi Airport Development Fund, which is meant to help develop Changi Airport’s Terminal 5 and ensure Singapore remains a “critical gateway for global travel and trade”.
Last year’s top-up to the Coastal and Flood Protection Fund – set up in 2020 to protect Singapore against rising sea levels and enhance flood resilience – amounted to S$5 billion as well.
Some recent announcements also provide big hints as to the key economic industries that the government is likely going to focus on this year and in coming years.
Last Friday, the Economic Strategy Review committee led by Deputy Prime Minister Gan Kim Yong recommended that Singapore establish itself as a global artificial intelligence (AI) leader, and push for artificial intelligence adoption across its economy.
And last month, Minister for Digital Development and Information Josephine Teo announced that the government is committing over S$1 billion in its National AI Research and Development Plan to strengthen public artificial intelligence research capabilities over five years from 2025 to 2030.
Mr Desmond Teo, the ASEAN private tax leader at professional services firm EY, said pursuing a broader AI ambition will have to mean going beyond just offering tax incentives.
“(It also requires) substantial investments in both hard infrastructure, in the form of facilities such as data centres, utilities, telecommunication networks and digital infrastructure, as well as soft infrastructure such as talent, cyber security and legal,” said Mr Teo, who added that Budget 2026 might include some such efforts to bolster the nation’s foundations in AI.
Overall, carefully balancing short-term and long-term needs is a long-held approach when planning the Budget, notes MOF.
While some Budgets receive more attention as they took place in times of crisis, every Budget is important, the ministry’s spokesperson noted.
“But every Budget will deal with the issues of the day, while building on the foundations set by previous Budgets, ensuring that we meet current needs while investing for future generations.”
As Budget 2026 approaches, Mr Song the economist said that it will be natural for Singaporeans to be most concerned about direct assistance to cope with cost-of-living concerns, despite some easing of inflation rates.
“Your plate of chicken rice or briyani are not getting cheaper – prices are just not rising as quickly as they used to. To the average household, it’s these headline prices and coping with immediate bread-and-butter issues that matter,” he said.
However, he added, the Budget will also be addressing equally important concerns such as caring for an ageing society, strengthening the economy and protecting workers, which will affect all Singaporeans in the long run.
Agreeing, Mr Patrick Yeo, the markets leader at PwC Singapore added: “The annual Singapore Budget affects every one of us, albeit in different ways. Beyond the headlines, it is important for every Singaporean to have an understanding of our nation’s priorities, as these will eventually cascade down to the individual level, affecting how we live, work and plan for the future.”