Singapore prepares off-budget relief as energy risks threaten $8.5b surplus

The government signals readiness to deploy monetary and fiscal measures.

Singapore may expand fiscal support measures if Middle East tensions continue to push up energy and transport costs, according to RHB.

The bank said the government could deploy a mix of monetary, fiscal, and targeted household measures, including expanding existing schemes such as U-Save rebates, GST vouchers, and Assurance Packages to ease cost-of-living pressures.

Prime Minister Lawrence Wong has also signalled readiness to introduce additional support beyond Budget FY2026 if geopolitical risks worsen. RHB said initial measures would likely focus on rolling out previously announced utility rebates and business assistance, whilst monitoring global energy developments.

Singapore is heavily  reliant on trade. An escalation of the conflict is seen as a significant risk to the country whose energy relies almost entirely on imported fuels, with energy products accounting for roughly 20% of its total imports over the 2020 to 2024 period.

The bank noted that further support is likely to be off-budget, which could affect FY2026 fiscal estimates. Singapore currently projects a fiscal surplus of $8.5b, or 1% of GDP, for FY2026, but additional relief programmes could increase expenditure and put pressure on the fiscal balance.

Despite this, RHB said targeted support could help stabilise household consumption, safeguard jobs, and sustain business activity. The bank pointed to Singapore’s response to the Russia–Ukraine conflict in 2022, when the government introduced cash payouts, utilities rebates, CDC vouchers, and business support schemes, including two additional $1.5b packages to offset rising energy and food costs.

RHB expects Singapore to adopt a similar targeted and fiscally disciplined approach if Middle East tensions persist, focusing on household support and business assistance whilst relying on monetary policy to contain inflation.