Thursday, December 02, 2004

More budget cuts 

The government intends to cut its budget further. Excerpt from a report in The Straits Times today.

Govt deepens budget cuts: it’s now 3%
The Government will be tightening its belt further in the next financial year (FY), trimming permanently the budgets of all but one of its ministries by 3 per cent, instead of the 2 per cent originally announced... These cuts will take the Government closer towards its aim to balance the Budget by FY 2005.

The deeper cut was outlined in a 31-page report released yesterday by Parliament’s Estimates Committee...

The panel’s observations include one on the Government’s target of reducing headcount by 3 per cent each year for the next three years. While it supported the move, the panel noted that the Government would not be in the red for the next two years, and urged MOF to not retrench unnecessarily and to exercise flexibility, so as not to adversely affect its services to the public.

The panel also made the point that with the public expecting more from the Government, and given that medical costs and funds for workers’ training will increase with an ageing population, the authorities should ensure the sustainability of such programmes and that funds are available for them...
I thought the panel’s observation on the reduction of headcount was especially noteworthy. Considering that the government itself has expressed concern about the unemployment situation, and that the deficits were incurred largely to alleviate the effects of the economic downturn of the past few years, it would be ironic if the government itself aggravates the unemployment situation (see also previous post).

Also, to put things in perspective, the Singapore government’s budget deficit is small, and very conservatively-defined at that. The government does not need to be in any hurry to reverse the deficit. Singapore is not the United States.


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