WITH stronger than expected economic growth in 2007, the Government expect the overall budget Balance to be a surplus of $6.4 billion for financial year 2007, compared to the deficit of $0.7 billion that was originally projected.

Finance Minister Tharman Shanmugaratnam said this in his opening Budget statement in Parliament on Friday.

The growth rate of 4.5 per cent to 6.5 per cent was also in line with market forecasts, he said.

With actual growth at 7.7 per cent, corporate and personal income taxes came in to some $1 billion higher than projected. GST revenues also exceeded projection by about $1.2 billion, mostly from higher consumption.

GST collection arising from the 2 per cent hike in July is estimated at about $1.4 billion in total, which now just matches the size of the GST Offset Package and Workfare Income Supplement tranches that were distributed in FY2007.

But the the largest boost to revenues came from the exceptionally buoyant property market last year. Prices of private residential units rose by over 30 per cent, much higher than industry forecasts of around 10 per to 15 per cent at the beginning of the year.

The volume of property transactions went up by over 60 per cent.

Stamp duties consequently rose to an unprecedented $3.8 billion, $2.3 billion higher than expected. Other property related revenues were around $1.1 billion above projections.

These were large gains, out of the ordinary, and which we cannot expect to see very often.

'The overall budget surplus of $6.4 billion was therefore the result of a strong economy and property market. The surplus was also an appropriate fiscal stance to adopt, as it avoided adding further liquidity and stimulus to an already rapidly growing economy,' said the Minister.