The debate on the Singapore Budget 2023 on Wednesday (22 Feb) seems to be centred around the balance between spending and prudence.
Deputy Prime Minister and Finance Minister Lawrence Wong has announced that the government is expecting a deficit of $2 billion for the 2022 financial year and a deficit of S$0.4 billion for the 2023 financial year.
While some Members of Parliament have called for increased spending to help Singaporeans, especially in light of the escalating cost of living, some from the People’s Action Party (PAP) have expressed concerns about the country’s fiscal room in the future.
But don’t the PAP MPs seem to be missing “the elephant in the room”?
It should be noted that S$19.58 billion of Special Transfers, including Top-ups to Endowment and Trust Funds, are being charged off as one year’s expenditure when they are meant to fund spending for many years into the future.
For example, the Pioneer Generation Fund and Merdeka Generation Fund were charged at S$8 billion in 2015 and S$6.1 billion in 2019 as one year’s expenditure, but as of March 2022, only a portion of these funds has been disbursed.
According to a parliamentary reply in October 2022, as of March 31, 2022, the Pioneer Generation Fund has disbursed only S$3.04 billion, with a fund balance of S$6.16 billion. The Merdeka Generation Fund has disbursed only S$0.72 billion, with a fund balance of S$5.72 billion.
This practice of charging future spending as a one-time expense does not align with the International Monetary Fund’s (IMF) fiscal reporting guidelines.
Moreover, the $16.82 billion of Top-ups to Endowment and Trust Funds represents a significant increase of 169.1% compared to the previous year.
