MPS CALLING FOR FISCAL PRUDENCE, ARE WE DEEP IN DEBT?

Dear Editors

I refer to the article “Budget 2017: Need for fiscal prudence, even as Govt helps workers and businesses, say MPs” (Channel NewsAsia, Feb 28).

It states that “The first day of the debate on Budget 2017 on Tuesday (Feb 28) saw Members of Parliament (MPs) speak on the Government’s plans to help workers and enable businesses to reposition for the future, as well as the need for financial prudence.

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But even as Singapore doubles down on investments to help businesses and workers transform, as well as continue social spending and infrastructure developments, some MPs have voiced concerns about overspending. MP for West Coast GRC Foo Mee Har noted that Singapore’s weakening fiscal position is a concern, after total expenditure growth outstripped growth in operating revenue for five consecutive years. She also said it is “worrying” that additional funds from Temasek’s inclusion in the Net Investment Returns (NIR) framework “appears to have been exhausted quickly”.

“Clearly, Singapore must find a sustainable fiscal footing for our future generations and we need a thorough review of both expenditure and revenue,” said Ms Foo, while proposing a limit on how much the Government can take from the Net Investment Returns Contribution (NIRC) to fund expenses. Ms Sun echoed that view and suggested binding or matching expenditures to the country’s revenues so that any increases in expenditure are carefully considered in relation to revenue. The MP for Pasir Ris-Punggol GRC also raised a question about the “inherent risks” of being reliant on the NIRC – the largest source of funds for Singapore’s Budget at about 20 per cent of total revenue. She cited recent comments from Norway’s central bank governor, who warned about a potential 50 per cent loss of capital over the next 10 years for the country’s sovereign wealth fund amid rising expenditure.”

In this connection, I added up the Budget surpluses/deficits from 1997 to 2016 using the chart in the Straits Times (50 years of the Singapore Budget). Net Budget surpluses from 1997 to 2016 – $31.1b The total Budget surpluses and deficits were $44.5 and -$13.4 billion, respectively. This means that the net Budget surpluses from 1997 to 2016 is $31.1 billion ($44.5 – $13.4). As these figures include Transfers to Trust and Endowment Funds which under IMF fiscal reporting guidelines should not be charged as one-time expenditures in the Budget – the Budget surpluses may actually be much higher.

FY2016 – Budget surplus $5.2 or $8.8b? For example, if we add back the Trust and Endowment Funds of $3.6 billion – the Budget surplus would rise from $5.2 billion to $8.8 billion in FY2016. Budget Cash Surplus from 2005 to 2014 – $213.2b? According to the Department of Statistics’ Monthly Digest of Statistics – the total Budget Cash Surplus/Deficit (M130611 – Government Finance, Annual) from 2005 to 2014 was $213.2 billion (I added up the yearly figures).

So, if we follow the full IMF fiscal reporting guidelines – does it mean that our Budget Cash Surpluses from 2005 to 2014 was about a whopping $213.2 billion? Looking at the above data – do you think that we should be emphasising so much on the need for fiscal prudence in the Parliamentary debate on the Budget?

What are your thoughts on this?

Leong Sze Hian

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