Singapore’s Fiscal Response to the Great Recession: Radical Innovation or Incremental Change?

Abstract

Singapore’s Budget for financial year (FY) 2009 was delivered in January, at the start of the Great Recession. Commentators hailed it as an extraordinary budget, and praised the radical policy measures that it contained. Although these claims contained a grain of truth, they also overstated the extraordinariness of Budget 2009. This case study situates Budget 2009 in the context of the Ministry of Finance's evolving policy orientations, and relates the seemingly radical measures in Budget 2009 to earlier policy initiatives that the Ministry had undertaken in response to greater economic volatility and uncertainty. The perspective gained from such an understanding of Budget 2009 is one of path dependence, continuity and incremental change. Though policymakers were articulating what appeared to be novel policies, these were in fact highly embedded in established policy understandings, orientations and bureaucratic capabilities. Analysing Budget 2009 against the backdrop of the earlier policy innovations of the Finance Ministry also allows one to appreciate how cumulative, incremental policy decisions contributed to significant shifts in the Singapore government’s response to a major recession.