Singapore may abandon plans to raise the levy on foreign workers in view of the worsening economic conditions, a Bank of America Merrill Lynch analyst has said.

The upcoming budget will also likely benefit businesses, which were neglected over the past few years, the report said, according to the Business Times.

"Former finance minister Tharman deferred levy increases planned for last year to 2016-17. We believe these levy increases will be abolished altogether, given worsening economic conditions," BOA's Asean economist Chua Hak Bin said.

The analyst also said Budget 2016 is unlikely to have a greatly positive impact on markets and economic growth.

"Businesses are hoping for more help, after being somewhat neglected over the past few years, in favor of social goals. The focus will be on whether Minister Heng remains left-of-center and be more responsive to businesses," the analyst said.

In late January, Minister of State for Manpower, Teo Ser Luck, had said the foreign worker levy in the country will not be scrapped.

"We believe that foreign worker levies still play a part and indeed foreign worker levies will continue to be there and the policy will not change," the minister said, responding to a raft of recommendations for 2016 budget made by the small and medium business segments.

"I don't want to raise expectations because the manpower policy we implemented is ongoing and there's a lot of refinement along the way, so we have to look at the situation," he said.