Technical Issues About Money

In April 2012. the International Monetary Fund (IMF) had restated Singapore’s fiscal data in the IMF’s World Economic Outlook (WEO) database. The restatement increased the figure for the cumulative government surplus for the period 1990-2011 from $271bn as reported in the WEO database in September 2011 to $429bn.

So what were the "technical issues" (in IMF language) that resulted in a increase of the cumulative government surplus? "Factually yours" would like you to believe that the restatement of data in the WEO database was due to "technical errors".

There's no error. The IMF presentation format (Government Finance Statistics Manual - GFSM 2001) includes all receipts, including land sales proceeds, and total investment income.

The presentation format of the Government Budget is different, deviating even from the government finance data reported in the Yearbook of Statistics published by the Singapore Department of Statistics.

The official explanation per FAQ #8:
"1) The Overall Budget Balance excludes proceeds derived from the sale of land, as these are not available for spending and are part of Past Reserves. This is because the sale of land converts a land asset into a financial asset, with both comprising part of Past Reserves. To spend the financial proceeds from land sales will mean drawing down Past Reserves."

Moreover, only up to 50% of net investment returns on a real basis can be included in the Budget for spending by the Government, thanks to the Reserves Protection Framework in the Singapore Constitution. They are hence not included in the Government Budget, which provides the fiscal resources available to the Government to spend on public infrastructure, health care, social welfare, education, and the insatiable appetite of the war machinery.

In simple terms, not all of the profits harvested from property sales and investment of our CPF savings are distributed for the good of the people. That portion of the housing price tag attributed to "opportunity cost of land" is squirrelled away beyond touch. The acclaimed double-digit returns from CPF funds converted into "special securities" for investment deals translate to only 2% for the original owners. That how the math works in Singapore. Nobody outside a select coterie  is allowed to peek at the true picture of the reserves, save the President, that's the uncle in the family tree.

After it was announced that the economy shrank by 0.7 per cent in the second quarter, analysts said there was a good chance of Singapore entering a technical recession. Prime Minister Lee Hsien Loong's solution hinted on Tuesday was that Q2 figures may be revised upwards into positive territory. See, they do it all the time. All done by restating numbers.

"I think that's another reason why we must keep our economy strong, because there's a very big impact on the mood of the people on the confidence of the population and of investors when they see an economy which is able to continue to make progress steadily." Technically that's as accurate as it gets. When the economy is down, the mood of the people tends to sour pretty quickly.