IMF Welcomes Singapore's Fiscal Policies
by Mary Swire, Lowtax.net, Hong Kong
24 July, 2015
The International Monetary Fund (IMF) has expressed support for Singapore's low-tax regime and welcomed recent fiscal reforms in the country.
The Fund said in its 2015 Article IV consultation report for the country that the two percent increase to the marginal personal income tax rate for the highest income bracket will tackle inequality.
The IMF said that low tax rates have strengthened the business climate and contributed to high rates of economic growth. It said that sustained over-performance under the conservative fiscal rule, which requires a balanced budget over the political term of the Government, has resulted in the build-up of large fiscal reserves. These savings will allow the Government to meet expanding spending needs to maintain Singapore's logistics edge through additional infrastructure investments and to meet the needs of its aging society.
The IMF commended the authorities' continued maintenance of high regulatory and supervisory standards in the financial sector, including its progress in implementing recommendations issued by the IMF under the Financial Sector Assessment Program (FSAP). It welcomed the moderation in credit growth, progress in reducing foreign currency liquidity risk, and the modest and gradual price reductions in the property market. At the same time, the report called for continued vigilance in view of the high levels of household leverage and corporate debt.
The report also recommended continuous efforts to bring the Anti-Money Laundering/Combating the Financing of Terrorism framework in line with enhanced international standards.
The IMF has predicted that Singapore's economy will grow by 2.9 percent in 2015.
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