THE TEMASEK TIMES

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SHOCKING: Singapore is one of most indebted countries in the world despite large govt surpluses

Posted by temasektimes on June 4, 2012

Singapore has become one of the most indebted countries in the world despite supposedly running large and sustained government surpluses, wrote Professor Christopher Balding (pic left) from HSBC Business School, Peking University Graduate School in a landmark paper on Singapore’s sovereign wealth fund Temasek Holdings.

In the paper, Professor Balding revealed that there is a “minimum of $350 billion SGD or $275 billion USD unaccounted for from historical surpluses and financing operations” based on publicly available economic data on Singapore finances.

“Singapore has become one of the most indebted countries in the world. According to recent IMF data, when taking a moving average of the 2008-2011 period, Singapore is the 13th most publicly indebted country in the world relative to GDP. Singapore has a higher debt to GDP than Iceland, Ireland, Portugal and Belgium and is only a little behind Iraq and Italy,” he wrote.

Professor Balding added that what makes this level of indebtedness even more concerning is that Singapore has managed to accumulate such high levels of debt while supposedly running constant surpluses.

“Singapore is the only country to have managed to average a surplus fiscal position and increase its overall indebtedness to nearly 100% of GDP. All other countries with high levels of debt such as the United States and western Europe, have long term public finance deficits which adds to total public indebtedness. There appears no valid reason for a country to incur large and sustained public surpluses and increase their total public indebtedness to such high levels.”

Read Prof Balding’s article in full here.

47 Responses to “SHOCKING: Singapore is one of most indebted countries in the world despite large govt surpluses”

  1. Waiting to see pee-a-pee sue him. If they don’t, that means this guy’s telling the truth.

  2. papsmear said

    Inaccurate! Its taking account of CPF as public debt. I study this for a long time already.
    Of course if everybody withdraw CPF at 1 shot, then spore will go bankrupt like iceland.

    • David LaNigiro said

      The government pays us interest on CPF, it is just like the bank pays us interest when we have savings account opened with them.. From the bank / government books, it is correct to reflect as liability (borrowing). Any accounts officer can figure that out I am sure.

    • Jack Ng said

      how did you manage to conclude that?

    • voice said

      excuse me, please read the article again. It says UNACCOUNTED SURPLUS! means garment claims to have earned alot of money, but where is there money now? In lay man terms, if you don’t get it, unaccounted means either lost, misplaced or stolen. Or might be a case of false accounting.
      This article is not talking about just debt alone. But mainly on why is there missing or UNACCOUNTED money that caused the unbalance to the debt.
      Let me put it simple why your explanation might not be sound.
      For example, 30 years ago, garment say to 10 people, each lend me $1 then 30 years when you retire i return you $1.10. $0.10 as interest over the 30 years. Then 30 years later, the garment tell the people, thanks to you 10 guys, from the $10 we collected from you guys, we help all of us earn $100 now. so the 10 guys ask, so can we take back $1.10 now?
      And someone would say… NO!if all 10 guys withdraw all their $1.10, the garment would go bankrupt!
      does that even make a single sense?
      That’s basically what the article trying to say? NOT saying why so much debt.
      but saying WHERE IS THE MONEY???

    • Mitey said

      Doesn’t everybody has a right to their cpf? Isn’t it our hard-earned money? Not like the government. They earned their money by using our hard-earned money! Without our cpf the government is broke! Somemore want big pay!

    • an island open to evil foreigners said

      PAP SMEAR, study so much must put what you learn to good us lah.
      @Did you know Singapore Gahman dumped alot of money in companies in Oman, Yemen, Libya, Vietnam, Gabon, Angola? I am only naming a few out of 37 countries which I knew have Singapore Gahman controlled companies lor.
      @Did you know our ministers have foreign properties worth a total of SGD$466M in foreign countries too? These land and properties are for “resort-style” living uses, you know. You will be very surprised that a Singapore Minister has a Safari Resort of 38 bungalows in one African country lor.

      NO NEED TO STUDY SO MUCH LAH, GO TAKE A WALK OUT OF THIS LITTLE ISLAND OF SINGAPORE AND YOU WILL BE VERY SHOCKED WITH WHAT SINGAHMAN IS DOING, USING ALL OUR TAX PAYERS’ MONEY AND CPF FOR THEIR OWN USES.

  3. P Koh said

    Poor investment policies controlled by people who are not financial experts and do not understand basic principles of the investment rule that high returns mean high risk of losses. This is the cause of the indebtedness. To start looking into investing in the European situation when others are pulling out and are watching for signs of possible failure of the world financial system due to the huge financial woes, spells nothing but trouble. If Singapore goes further down in indebtedness, the high prices of property currently in place will definitely take a serious tumble aided by the poor equity markets which are reeling their ugly heads worldwide at this very moment. Where is the accountability by persons involved and what can the populace do to estopped these morons from putting our hard earned money into risky investments without a good understanding of which direction the world financial machinery is heading. It is going to be a very sad day for Singaporeans.

  4. unknown said

    If the figure is the fact? Then WTF is the Singapore Government doing with our hard earned money??? With such huge surplus accumulated from our CPF, GST, HDB, COE, ERP, MRT, SBS, PUB, etc, etc, Where are our money? Why is it the the ministers in the government are having 3 times higher pay than US president? What have they been doing that Singapore has become one of the most indebted countries in the world???

    Do they deserve such obscenely high pay and yet having incur such high debt of $350 billion SGD or $275 billion USD??? Looks like our government is not doing the job well to bring profit and sharing it to the citizens, but instead they came out with many money generating policies at the expenses of our citizens????

    Please think again in future which Party, we should place our faith???

  5. That’s why they rise CPF Minimum Sum to lock everyone’s money in there…… to hide their own incompetence.

  6. wMulew said

    The so called expert seem to know nothing about the debt of SG, it’s called CPF. Unless U want the government to hide it like the ang mohs.

  7. lee said

    Of course if all CPF are to be drawn out, it will be like a bank run. whether the liabilities are backed, no one knows for sure. and that’s why new money has to pay the current drawings. Similarity to a ponzi ??

  8. wMulew said

    Dear TT

    Please get that idiot who wrote that to read this
    http://bschool.nus.edu.sg/LinkClick.aspx?fileticket=91h8yl55Smo%3D&tabid=1445&mid=5733

    For a self proclaimed expert. The idiot who wrote that seem to know nothing

    • Jardel said

      Just read it. Words…..from an economic point of view, words are not enough. The first point that was stated mentioned about Gross and Net. Hmm. Any concrete evidence to show their difference? Balding’s report, if you have read, did some comparisons against market growth and deficit. So if the report that you are pointing to us, is accurate and reliable, should it not show the same level of comparison rather than “hot air”.

      In terms of basic reporting skills, Balding’s report exhibited far more information as compared to the NUS Business School. Furthermore, the latter has. I think so, access to information and rather than consolidating a solid report based on facts, this “professor” had chosen to use words such as Gross and Net and I think, to use simple terms, this report is to “smoke” the factual report of the huge deficit that Singapore is experiencing now.

      More transparency is needed and obviously our dead Mr. TT is not doing so. He is busy signing “pay cheque” to PAP if the Balding report proves to be what the reality is.

      Be very afraid. Singaporeans.

      • Jardel said

        Sorry, I meant dear. Not Dead. Though I thought the latter should be the word but I think our nation is paying him millions a year and he will not bare to die to early. ^0^ Sorry. Sir.

    • aussie bogan said

      Dear WMulew,

      I wouldn’t call an academic in Peking Uni’s Business School an idiot.

      Can’t say the same for you though. Please indulge in this, idiot:
      http://christopherbalding.com/

    • Fun said

      Really Smartypants? If you are so clever, why don’t you go respond on this Professor’s website and rebut him one-on-one?!

  9. CKMPD said

    GIC and TH have to come clean, be transparent and be accountable.

  10. pngkueh_forever said

    $350 billion unaccounted for from historical surpluses and financial operations…… this is serious, I no understand. It does make history. Where is the money ????

  11. d34dd said

    If everybody CAN withdraw CPF at 1 shot, the money will be stored in liquid cash instead of put into hedge/sovereign funds.

    “Singapore has a higher debt to GDP than Iceland, Ireland, Portugal and Belgium and is only a little behind Iraq and Italy” is either quoted out of context, or gross misleading by omission of the full picture.

  12. Khamul said

    Everybody knows that fiscal surpluses doesnt mean jack shit; it can be manipulated. But it works as a means of fooling the laymen of the actual growth of a country.

  13. joeaudar said

    I think in Singapore, there is only one qualify person to substantiate such figures. He is non other than Mr Chen Show Mao

  14. 'Mk Chin said

    Transparency needed from the government!
    We’re SingaRich or SingaPoor?

  15. Alien said

    All reported assets of Singapore and returns are all paper value. The value changes all the time depending on market conditions. How they report it is subjective as paper value can be subjective. We will never know as I doubt with the current government, the truth will be revealed. They are not subjected to independent audit checks on how they report. But it may be a good thing for Singapore, because no one can proof that Singapore is in bad financial shape if it is. Singapore Temasek has no actual shareholders to report to except the government. They do not suffer share devaluation even if they have a bad year or report. And maybe not subjected to external independent audit checks that is not linked to the government.
    As long as the government is able to pay its owned money and fork out liquid cash for investments. It can remain in good financial standing. Singapore generate a fair amount of surplus revenue yearly. Such amount of liquid cash ( CPF, Taxes, COE etc) finance purchases of assets and repayment of debt. Such debt may be in term of CPF which the government by policy changes, is not required to repay very quickly and there is no risk of default. Government only pay when we reach retirement age. And much of it is used to finance government profitable businesses eg purchase of flat( CPF holder pay interest for hdb loan and hdb flats are highly profitable). Equate this to a very safe ponzi / insurance scheme that will never end. The amount of CPF the government collect a year will likely pay out what the government has to pay back to retirees.
    So if the nation does not borrow from overseas debtors, but it’s citizens, there is little chance of a default. Unless the citizens becomes too poor to finance the government, which is unlikely since the government has surpluses every year. If the governent continues with high HDB prices, COEs and Taxes, that day that Singaporeans are too poor will actually come. Many of us are rich on paper but not cash rich, especially the poor and middle class, who have housing installments etc to pay.
    The real question is what is actually the value of our reserves that is supposed to be accumulated. Much of it are likely in paper assets, investment. Likely not much in cash. How much have the assets grown or shrunk? Unless the government deal with very bad investments, or they have to use a huge part of it for nation building or fix its operating deficits which so far is none if the government is truthful. So it is up to us citizens to take the leap of faith to trust the government’s integrity on the reporting.

    • Pissed said

      So you are saying we should pretend we are blind and stay quiet while they screw us over? They screw up then we pay for their mistake?

  16. Compatriot said

    The integrity and sovereignty of Singapore and the ruling PAP government will be inadvertently questionable.of this revelation.A reciprocal is required if what Professor Christopher Balding wrote is fair comment or as otherwise

    Singaporeans deserve to be acknowledge of the truth from this episode

  17. no wonder said

    no wonder CPF min sum keep going up

  18. Yayrhah said

    All this LOADS of MONEY has made some folks at Temasek very very rich!

  19. Double counting said

    Hi guys,

    Singapore’s debt is high but for ok reasons.

    Singapore’s borrowings are in the form of:

    i) Singapore Government Securities (SGS) – issued to develop the domestic debt market
    ii) Special Singapore Government Securities (SSGS) – non-tradable bonds issued specifically to meet the investment needs of the Central Provident Fund (CPF) Board.

    But yah lah, as someone said, if all our CPF monies are withdrawn at one shot, Singapore may be in trouble. But unlikely. That’s why Singaproe still rated AAA.

    Can take a look at MOF’s write-up explaining it.
    http://app.mof.gov.sg/sg_borrowings.aspx

  20. Anon said

    Before anyone start to blast PAP, lets look at what other political parties want. They want to cut income tax or cut tax on necessities however, if we cut tax, that would put us in a deficit. Tax revenue in 2011 came up like this, total of $50.53 Billion. Expenses in running Singapore, providing public goods etc. came up at 56.12 Billion. We avoided being in deficit by having the GIC return on investments of $7.91 Billion. So, if we vote in the opposition, we would be in an even worse situation with a yearly deficit which of course, the opposition would propose to clear by dipping into the reserves which was meant for emergencies. Great idea WP!

    • Brainwashed said

      Should tax high income earners more?
      If dun use reserves for this generation, next generation will suffer more?
      Emergencies like GRC and ISA are good excuses?

      • an island open to evil foreigners said

        so many foreign companies open a branch in Singapore and take in cheap labor from all corners of the earth and supply these manpower locally and internationally. Companies don’t pay tax because employees are told they don’t have to declare tax in Singapore. I associate with foreigners and that is what they told me, almost 90% of them no need to pay tax. Gahman is shrewd, let these high foreign earners spend and keep the money in Singapore so Singapore always have cash to spend like a little rich boy lor.

    • Anon said

      Just a breakdown of the tax figures for your information:
      31% of Singaporeans pay tax with only 41% of the economically-active population paying income tax.
      20% is the highest marginal tax rate, levied on income above $320,000.
      The first S$320,000 of income is taxed at lower rates.
      The maximum effective tax rate is less than 20%.
      The top 20% of Singapore households plus companies pay 84% of the total tax collected.
      The top 40% of Singaporeans plus foreigners account for 84.2% of all GST collected.

      Isn’t the progressive tax system already sufficiently advanced? What are your reasons for raising the tax even more for the high income earners?
      Reserves are meant for times of need not as a political tool to cover failed political agendas like making up for the debt incurred as a result of a political plan like WP’s, its for everyone to use.
      Any evidence to show reserves were used in the GRC or ISA as you said above?

      Thanks.

    • Jack said

      We are NOT blasting PAP, we are questioning the government in respond to the report by the professor. There is no visibility of the real report card of the government investment. In fact, even the PAP MPs also do not have the visibility of the numbers, GIC and Temasek Holding need to be audited and the report must be available to the public.

      • Compatriot said

        Agreed.File it in and put up for a debate in the coming parliamentary sittings

        The Opposition is without a doubt will submit for an answer,I just wonder will any of the PAP MP oblidge?

  21. fastchannel said

    Here is the SECRET to not let your CPF money to go to TH. Allocate as much of your CPF money as possible into stock market and corporate bond market.

    One dollar invested in stock, bond or flat is one dollar not in TH or GIC.

    I’ve asked my grandparents, parents and relatives to do it.

  22. Shawn the Train said

    let’s all post “Where is the money” on our fb.

  23. Leo said

    Our government know this ‘window dressing’ tatics which other countries failed to recognise. That is why we have a surplus rather than negative.

  24. Maniandy said

    How to prove this? This is a very serious matter. Get it wrong and u’re screwed….and plastered.

  25. JT said

    Before you post an article that says “Shocking, blah blah blah” to incite excitement in your readers, do educate yourself to distinguish between national external debt and national public debt.
    It is not a surprise that S’pore’s public debt (owed to internal entities) is more than 100% GDP, because a large chunk of it is held in CPF. That means, the government borrows money from CPF, and use to… as we all know it, invest through GIC and TH. As for the profits and losses due to GIC/TH, and the ensuing debate, that’s another issue.
    S’pore’s external debt (owed to external entities internationally) is merely 5% GDP, one of the lowest.
    In the international debt market, S’pore is a net creditor.

  26. Smike said

    Ai yoh, this guy is just trying to fish more information about Singapore finances.
    There is no reason why we should strip ourselves naked just because someone like him asks !

    Don’t be taken in !!

    Precisely that’s why we have an elected President to safeguard our reserves !!

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