"There are three kinds of lies -- lies, damned lies, and statistics" Mark Twain (attributed)
"If you torture the data long enough, it will confess to anything." Ronald Coase
"The only thing more shocking than the numbers was how many people believed them" Bethany Mclean (on the Enron scandal)
"I gift-wrapped and delivered the largest Ponzi scheme in history to them, and somehow they couldn't be bothered to conduct a thorough and proper investigation" Harry Markopolos (the whistleblower on Bernie Madoff)The above quotes basically say the same thing. I personally prefer this meme which I used in an economics article long ago.
Or how about this:
Show this to investors. A balanced budget means responsible governance. All the attractive grants and subsidies is pro-business which leads to more investments into Singapore and more jobs.
$300 Other revenue
$100 GST
$ 50 Increase GST
$450
$375 Other expenses
$ 75 Corporate grants, subsidies
$ 0 Budget balanced
====
Show this to Singaporeans. See, we have no choice but to increase GST. We cannot reduce the grants or subsidies which will lead to lower GDP and less jobs.
$300 Other revenue
$100 GST
$400
$375 Other expenses
$ 75 Corporate grants, subsidies
$ 50 Budget deficit
====
This is not to suggest the MOF fiscal statement above is false or scam, but merely to say one should make an effort to understand what it's all about.
Most people are puzzled by the line item "Capitalisation of significant infras" of $4.17b in 2024. I asked several qualified accountants does the statement represent a budget surplus of $6.41b in 2024. None has volunteered an answer.
This has MP Liang Eng How asking "Is this capitalisation an accounting item"?. One of my favourite social media commentator on things finance, Chris Kuan, also mentioned "accounting item". At first reading, I don't even know what "accounting item" means in relation to this $4.17b.
This is a fiscal statement representing only cash flows. How does a capitalised item get into a cashflow statement. If anything, only infras that are "monetised" can get into this statement. The sales proceeds are cash revenue that is taken into the state coffers. Of course, no such sales happened.
The government receives substantially much more cash which are not appropriated for spending as these are not recognised as revenue. There are basically 5 other sources:
Most people are puzzled by the line item "Capitalisation of significant infras" of $4.17b in 2024. I asked several qualified accountants does the statement represent a budget surplus of $6.41b in 2024. None has volunteered an answer.
This has MP Liang Eng How asking "Is this capitalisation an accounting item"?. One of my favourite social media commentator on things finance, Chris Kuan, also mentioned "accounting item". At first reading, I don't even know what "accounting item" means in relation to this $4.17b.
This is a fiscal statement representing only cash flows. How does a capitalised item get into a cashflow statement. If anything, only infras that are "monetised" can get into this statement. The sales proceeds are cash revenue that is taken into the state coffers. Of course, no such sales happened.
The government receives substantially much more cash which are not appropriated for spending as these are not recognised as revenue. There are basically 5 other sources:
1. The excess liquidity resources that statutory boards send to the Treasury for consolidated investment on their behalf. This is reflected in the Fiduciary Fund in government's books.
2. Proceeds from the sale of land. This is transferred directly into reserves to be managed by GIC/Temasek.
3. Proceeds from issuance of government securities (ie government loans) which cannot be spent. These are Singapore Special Govt Securities (for CPF funds), Retail bonds (long term deposits for small investors) and Singapore Govt Securities (securities issued for the purpose of managing price discovery for SGD). These are accounted in the respective Securities Fund and managed by GIC.
4. Foreign currency proceeds from issuance of Reserves Management of Government Securities by the government to takeout the excess foreign reserves from MAS. These proceeds cannot be spent. It is reflected in the relevant Securities Fund and invested by GIC.
5. Government borrowing for special infrastructure projects under the Significant Infrastructure Government Loan Act (SINGA) which was legislated to allow the government to take advantage of cheap interest rates for infra building purposes. Aggregate borrowing is capped at S$90b.
Items (1) to (4) do not appear in the fiscal statement because the cash received are not to be spent.
Item (5) is different. The cash received is meant to be spent. Government borrows under SINGA by issuance of on-demand and 30-year or 50-year bonds. The cash coming in is recorded in Consolidated Loan Account and appropriated to the Development Fund. The Development Fund holds not just the SINGA debts, but appropriations out of Consolidated Funds, ie, cash from Revenue, set aside for other development projects. Some of the SINGA bonds are called Green Bonds which are meant to fund projects under the Singapore Green Plan 2030 objectives.
In 2024 $4.3 SINGA Bonds were issued and appropriated to the Development Fund. If I am not mistaken, this S$4.3b receipt is part of the S$15.25b under the "Other Fund" line in the statement. As at 30 Mar 2024, Singapore government SINGA debt stood at S$12.5b. This appears in the Assets-Liabilities Statement under the Development Fund head which has a balance of $$128.7b as at 30.3.2024.
For SINGA-funded projects, disbursements during the year are "capitalised". In 2024 S$4.17 were paid out of the Development Fund relating to these significant projects. This expenditure is reported under the "Capitalisation of Significant Infras" line. These projects are the North-South Corridor, Deep Tunnel Sewerage System, Jurong Region Line, and Cross Island Line.
So answering my own question, was there a budget surplus of S$6.41b in 2024, the answer is NO. The budget surplus was S$.2.62b which will be transferred to reserves.
The "capitalisation" of SINGA projects means any disbursements out of Development fund for such projects are taken into reserves. I can see this accounting treatment window-dresses the bottom line "Fiscal Position" to look impressive. Instead of a budget surplus S$2.62b we have a positive Fiscal Position of S$6.17b. Other than for this reason, I have no explanation for the purpose.
In reality, the S$4.17b disbursement is a sunk cost. There is no funds to transfer to GIC/Temasek to invest. And how can it be a "capital" when the SINGA bonds have not been repaid?
Items (1) to (4) do not appear in the fiscal statement because the cash received are not to be spent.
Item (5) is different. The cash received is meant to be spent. Government borrows under SINGA by issuance of on-demand and 30-year or 50-year bonds. The cash coming in is recorded in Consolidated Loan Account and appropriated to the Development Fund. The Development Fund holds not just the SINGA debts, but appropriations out of Consolidated Funds, ie, cash from Revenue, set aside for other development projects. Some of the SINGA bonds are called Green Bonds which are meant to fund projects under the Singapore Green Plan 2030 objectives.
In 2024 $4.3 SINGA Bonds were issued and appropriated to the Development Fund. If I am not mistaken, this S$4.3b receipt is part of the S$15.25b under the "Other Fund" line in the statement. As at 30 Mar 2024, Singapore government SINGA debt stood at S$12.5b. This appears in the Assets-Liabilities Statement under the Development Fund head which has a balance of $$128.7b as at 30.3.2024.
For SINGA-funded projects, disbursements during the year are "capitalised". In 2024 S$4.17 were paid out of the Development Fund relating to these significant projects. This expenditure is reported under the "Capitalisation of Significant Infras" line. These projects are the North-South Corridor, Deep Tunnel Sewerage System, Jurong Region Line, and Cross Island Line.
So answering my own question, was there a budget surplus of S$6.41b in 2024, the answer is NO. The budget surplus was S$.2.62b which will be transferred to reserves.
The "capitalisation" of SINGA projects means any disbursements out of Development fund for such projects are taken into reserves. I can see this accounting treatment window-dresses the bottom line "Fiscal Position" to look impressive. Instead of a budget surplus S$2.62b we have a positive Fiscal Position of S$6.17b. Other than for this reason, I have no explanation for the purpose.
In reality, the S$4.17b disbursement is a sunk cost. There is no funds to transfer to GIC/Temasek to invest. And how can it be a "capital" when the SINGA bonds have not been repaid?
MP Liang Eng How also asked "... is it a cash item that can be used to fund current expenditure?" MP Liang is Managing Director of Institutional Banking in Development Bank of Singapore, certainly not a finance illiterate. If he cannot understand the S$4.17b is a sunk cost, that money has already gone out, how can lesser Singaporeans be expected to understand?
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