Commenting on Mr Yeoh Lam Keong’s Facebook page, Mr Lee Hsien Yang, former CEO of Singtel shared a dated post of his, which states Singapore runs a massive budget surplus every year and the way it is calculated does not conform to accounting standards of the International Monetary Fund (IMF).
Mr Lee, who is also the son of the late Lee Kuan Yew and younger brother of the current Singapore Prime Minister, had chimed into a discussion that was ongoing on a post that Mr Yeoh had made under the orders of the POFMA office.
Just last Friday (18 Nov), the POFMA office issued correction directions to Mr Yeoh Lam Keong and the alternative news site, The Independent Singapore (TISG) over an alleged false statement regarding the Singapore government’s fiscal surpluses.
These correction directions were issued under the instruction of Mr Lawrence Wong, Deputy Prime Minister and Finance Minister for the Facebook posts published by Mr Yeoh on 7 November and articles and social media posts published by TISG on 9 and 12 November.
In those two posts, Mr Yeoh had written in support of suggestions by Associate Professor Jamus Lim made during the debate on the Goods & Service Tax hike, saying, “it seems completely unnecessary at the moment as we have a $30 bn structural fiscal surplus that we have not even begun to publicly delineate clear big spending plans for.”
According to the Ministry of Finance (MOF), this statement by the former GIC chief economist is untrue.
“Over the last two decades (excluding FY2020, which had a significant fiscal deficit due to COVID-19 expenditures), the Government recorded on average a fiscal balance of $2.2 billion per annum. It is therefore untrue that the Government has “a $30bn structural fiscal surplus” that is available for spending yearly.” said MOF in its clarification note.
In Mr Lee’s comment, he shared a Facebook post that he made in March this year where he wrote, “Singapore has historically run a massive budget surplus every year. The way the surplus is calculated does not conform to IMF accounting. Adjust for that, it would be even more of a surplus!”
In that same post, Mr Lee also links to an article published in academia.sg, “Government surpluses and foreign reserves in Singapore“, written by Mr Manu Bhaskaran, CEO of Centennial Asia Advisors and Ms Linda Lim, Professor Emerita at the Stephen M. Ross School of Business, University of Michigan.
The article points out that the Singapore Government runs a budget surplus when tax revenues exceed government spending, which in the country has amounted to above 5 per cent and often above 10 per cent of Gross Domestic Product nearly every year since 1990, by the government’s accounting.
“The different method used by the International Monetary Fund shows a fiscal balance roughly 5 to 7 percentage points higher in 2011-15. This means the government has taken in from the public, including private business, more than it has given out every year, for nearly two generations. A public sector surplus always equals a private sector deficit, but the size and longevity of Singapore’s annual budget surpluses would be historically unprecedented worldwide in the post-feudal capitalist era,” wrote the authors.
Responding to Mr Lee’s comment, Mr Yeoh commented, “excellent economic point on an alternative analytical perspective on our budget surpluses by a conservative and rigorous institution — the IMF itself!”
Govt Not In Position To Freely Spend Past Reserves
MOF in its clarification note, however, argues that the Singapore Constitution defines clearly the fiscal rules for the Government.
“Any public spending beyond these fiscal rules means that we will be using more from the Past Reserves, and leaving behind less for the next generation.”
It further points out that the Government is not in a position to freely or unilaterally decide to spend any part of the Past Reserves and any drawing of the Past Reserves is subject to the President’s concurrence.
In response to the POFMA correction directions received, Mr Yeoh commented on his Facebook page, saying that viewers can see the correction and his original statement and make up their own minds whether his comments and arguments are valid and contribute positively to debate on this important issue.
“Much as I understand the government’s standard position, I remain firmly of the view that this is an important and complex public policy issue, and there ought to be more meaningful public debate on this to appreciate other plausible alternative analytical perspectives, views and policy choices available to us as a society,” said Mr Yeoh.
IMF Standards Of Recording Revenue
IMF is an organization of 189 member countries that works to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.
While MOF states that the Singapore government receives a surplus of $2.2 billion per annum over the last two decades, SingStats’ data on Cash Surplus/Deficit based on IMF’s code tells a different story.
The footnote accompanying the data on cash surpluses notes that the data is based on the IMF’s Special Data Dissemination Standards.
One can see that the figures shown on the cash surplus that the Singapore Government receives each year are far greater than S$2.2 billion — other than in years with deficits due to massive handouts.
The footnote also writes, “Data in the table represent a broader definition of Government revenues and receipts than what are permissible for Government spending as presented in each year’s Budget Statement.”
“This is because some revenues and receipts accrue to the Government’s past reserves, which cannot be drawn on without the approval of the President.”
