An Open Letter to the Minister for Finance from Kenneth Jeyaretnam

Dear Minister,

I wrote to you on the 29th May raising concerns about our republic’s recent loan commitment to the IMF.  I have yet to receive a reply to that letter or an acknowledgement that it was received.

I am writing to you for a second time today, to raise legitimate questions about the way the Budget is presented to Parliament. I believe these are legitimate questions and I believe we have the right to ask them and receive a reply. I don’t see any reason that the Ministry of Finance would not want to be seen answering them swiftly and transparently.

I originally raised these questions in our Party’s official response to Budget 2012 in an open press release published over three months ago on February 23rd 2012. I stated in that release,

“… The budget presented to us by this government is a model for opacity. Overall it allows only a very limited picture of the government’s true financial position. Specifically the budget as presented does not follow globally accepted and followed standards as set out by IMF standards for data dissemination”

The state-controlled media have been practicing a complete black out on information from me personally or from my Party for over a year now. I am not referring to the bias that Mr Low MP complained of, nor of the type of character assassination he mentioned which is all too familiar to me, such as the State sponsored attack on my good character in the Wall Street Journal. I am referring to an attempt to completely keep my views out of the main stream media and a denial to me of the right of reply. As a result after you presented the budget, the usual snippets for a round up of Opposition views was included whilst our response, despite my credentials as an economist, was censored. I make this situation clear to you because it may be that you did not see my original Press release three months ago.

I provide the link here for your information (here)

Singapore Budget

In particular I have questions about the following:

  1. Why is the Budget not set out according to the IMF framework?
  2. As Chairman of the International Monetary and Financial Committee of the IMF, how do you square away the responsibilities and obligations of that position with the failure to follow IMF protocol for your own budget presentation? Surely you need to set an example of transparency above and beyond the minimum standards set by the IMF?
  3. Why does the Budget not include the figures for the General Government Finance surplus, which is obtainable only from the Yearbook of Statistics, which is also a year out of date?
  4. How is this prepared? Does it include all investment income and capital gains or losses on financial assets?
  5. Would you not agree that by only presenting the Operational Budget Balance including top-ups to Endowments and Trust Funds and only up to 50% of the Net Investment Returns you are obfuscating the complete picture pertaining to the government’s finances?
  6. Even if the current government is barred by the Constitution from spending past reserves without the President’s permission, should Parliament still not have access to the information about the performance of those reserves? This is the case in Norway.
  7. Why is there no statement to Parliament of the total net investment income including capital gains or losses and the amount that will accrete to past reserves?
  8. Under the Constitution you are required to present an audited Statement of Assets and Liabilities to Parliament at the same time as the Budget. Why is there no information as to the basis on which the statement has been prepared or the valuation policies used?

As I state above, it is the figures for the General Government Finance surplus which are relevant. I am much obliged to the helpful staff at the Statistics Department for sending me the figures dating back to 1980, which they admit they had to hunt around for and obtain, from different avenues.

I am an economist and had to give reasons for wanting these statistics and initially they wanted me to pay for them. What chance does an ordinary citizen have of obtaining transparency?  (That is a rhetorical question)

I assume that these figures include net investment income but there is no information as to whether they include capital gains or losses. I have looked at these in conjunction with the Statements of Assets and Liabilities (SAL) and I have specific questions pertaining to these figures.

Government Indebtedness

I have the following preliminary questions:

  1. What is responsible for the big rise in government indebtedness between the SAL balance sheet dates of 31st March 2009 and 31st March 2011?
  2. Why was the rise in net assets (defined as Total Assets minus the Government Securities Fund and Deposit Accounts) only some $14 billion between 2009 and 2011 or some 4% of net assets at 31st March 2009? During this period global equity market indices rose by over 60% and Temasek reported a return of 22% annualized over this two year period.
  3. The data on general government surpluses supplied by you between 1980 and 2010 add up to approximately $340 billion. However the IMF’s own figures for Singapore’s general government surplus (which start from 1990), when added to the MOF figures for 1980 to 1989, give a total of some $429 billion. Yet at the SAL balance sheet date of 31st March 2011 the total net assets of the government are shown as only $326 billion defined on the basis above. Do the surpluses include capital gains? If they do not, then the net assets total seems much too low given the rise in global equity markets and falls in interest rates since 1980. I have assumed they include all investment income. Please clarify that is the case.

To quote from my Budget response:

The foreword to the IMF manual also said that one of the aims of the analytical framework was to provide an early warning system as to when things started to go wrong. The other side of the coin of the lack of transparency with regard to the government’s true net asset position is that Singaporeans will never find out till it is too late if the reserves have been squandered due to bad management.

I am confident that there is a simple explanation for these apparent discrepancies and that you will easily be able to reassure Singaporeans and set their minds at rest. You will of course know, having often talked when you were a graduate student at Cambridge while I was an undergraduate that I am fully capable of understanding the figures and possible explanations that you provide.

I would appreciate a response to the first letter too. In particular I questioned whether the necessary resolutions under Article 144(1) of the Constitution had been obtained. Even if the loan was entirely constitutional and it was not necessary to seek Parliamentary or Presidential approval, I argued that Parliament should still have been consulted in its role as a check on the Executive.

However for a country aspiring to be in a leadership position at the IMF and for a person whose name has been mentioned as possible future head of that body, it is imperative that we go beyond basic standards of transparency and accountability and have ones that are at least as rigorous as those in other First World nations such as Norway, the UK or the US.

I look forward to your response.


Kenneth Jeyaretnam

Secretary General


Also read Kenneth's Open Letter to the President