Why analysts have high hopes for a healthy surplus from last year's budget

Here are 2 possible outcomes.

According to OCBC, Singapore's FY2013 Budgetary position is likely to show a healthy surplus. The FY2013 Budget projected that to run a primary surplus of $1.62b, basic surplus of $0.32b and an overall budget surplus of $2.42b.

However, operating revenue for the first three quarters of FY2013 has been stronger than initially estimated, especially for asset taxes and other taxes (which comprises of foreign worker levy, annual tonnage tax, water conservation tax and development charges), so the potential for a healthier than expected budget out-turn for FY2013 looks likely goven the stronger-than-expected GDP growth in the second half of the year.

Here's more from OCBC:

That said, there is still the question of what happens for FY2013 expenditure since only two quarters of the fiscal year are available at this juncture. Basically there are two possible outcomes:

1. If true to form, the government spends according to its FY2013 estimates of $53.41b by ramping up spending in the last two fiscal quarters of the current FY, we estimated that the budget surplus could be still be better than expected at around $3.9b (equivalent to 1.09% of GDP). This is about 63% higher than the $2.42b (equivalent to 0.7% of GDP) initially projected for in the FY2013 Budget, but still a more conservative scenarion than (2).

2. If the total expenditure for the remaining two quartewr is more conservative and closer to what was spent during the same period of FY2012, then the budget surplus may surge to exceed the $5b that we saw back in the rvised FY2012 budgetary position, possibly even as high as $6-7b (up to 1.9% of GDP) although this is a less likely scenario in our view. If this materializes, it may be the largest budget surplus seen since the pre-crisis days of 2007 which clocked in a $6.46b surplus (equivalent to 2.4% of GDP).