Singapore might cut back on cost-of-living support vouchers this year: economists

Maybank said the scheme could be dialed back as the government shifts spending priorities toward defense, infrastructure and artificial intelligence (AI).

"CDC vouchers are likely to be reduced from the elevated levels seen in FY2025 (CDC S$1.06 billion, SG60 S$2.2 billion) and become more targeted," the bank said in a recent report cited by Singapore Business Review.

People walk across Jubilee Bridge at Marina Bay in Singapore, April 24 2023. Photo by AFP

The CDC (Community Development Council) voucher scheme was launched in 2021 to help households manage living costs and to support merchants affected by the Covid-19 pandemic.

Last year, Singaporean households received S$800 (US$630) in these vouchers. Citizens aged 21 and older also received S$800 in SG60 vouchers, which work in a similar way, to mark the country’s 60th year of independence. Both vouchers can be used at participating heartland merchants, hawkers and supermarket chains.

Economists cited by The Business Times noted that the case for broad-based handouts has mostly faded as core inflation slowed to 0.7% last year from its peak of 6.1% in 2022.

Nonetheless, they expect the scheme to continue with some adjustments as cost-of-living worries remain widespread.

Tay Qi Hang, Southeast Asia economist at the Economist Intelligence Unit, said the vouchers will likely be "scaled-down and more targeted" and be worth about S$400-500, down from S$800 last year.

"A smaller payout and tighter income targeting would allow the government to provide continued relief while aligning more closely with the more benign inflation environment," he said.

Others have suggested a tiered system that provides less support to higher-income groups, unlike the general SG60 vouchers.

Over the last four years, a combined S$3.995 billion (US$3.15 billion) worth of the two vouchers has been spent.

At the launch of the most recent tranche of CDC vouchers last month, Low Yen Ling, senior minister of state for Culture, Community and Youth, and Trade and Industry, said the initiative has helped stimulate economic activity, encouraged digital adoption and fostered appreciation for local businesses, as quoted by The Straits Times.

DBS Group Research noted that the upcoming budget will mark the first under the new government term and will be key to building a foundation for steady, long-term growth amid rising external uncertainties.

"We believe Budget 2026 will focus on leveraging technology and innovation to power Singapore’s next phase of growth," it said in a report last Friday.

Maybank expects the city-state to increase spending on infrastructure investments, as well as programs to address manpower and cost issues.

The budget is scheduled to be presented by Lawrence Wong, Singapore’s Prime Minister and Finance Minister, on Feb. 12.

Wong said in a video last Tuesday that he and his team had consulted Singaporeans from diverse backgrounds and taken public feedback and views into account when constructing the budget.

"We have heard your aspirations and also your concerns about the uncertain external environment, the impact of technology and AI on jobs and also on cost pressures that you face," he said in the video, as quoted by AsiaOne.