The Government’s budget surplus/deficit is defined and presented as follows:
Operating Revenue (collections from taxes, fees and charges and others)
(Less) Total Expenditure
(Less) Special Transfers excluding Top-Ups to Endowment and Trust Funds
(Less) Top-Ups to Endowment and Trust Funds
(Add)Net Investment Returns Contribution (NIRC)
Overall Budget Surplus/(Deficit)
The Net Investment Returns Contribution (NIRC) comprises up to 50% of the Net Investment Returns on the net assets managed by the Government of Singapore Investment Corporation (GIC) and the Monetary Authority of Singapore (MAS), and up to 50% of the investment income from the remaining assets (which includes Temasek Holdings). For more information on the rules governing how investment returns from Past Reserves can be taken into each year’s Budget for spending, please refer to Section II of “Our Nation’s Reserves”.
The annual Government Budget is prepared on a financial year (FY) basis. The FY for the Government runs from 1 April of one year to 31 March of the following year. For example, FY2011 is from 1 April 2011 to 31 March 2012.
The Budget serves two purposes:
a. It serves as a record of the approved levels of expenditure and accountability in the usage of government funds; and
b. It is also a plan of the estimated government revenue and expenditures for the FY. Before the FY starts, the Minister for Finance would present the annual budget that has been approved by Cabinet to Parliament. This normally takes place in February. The budget debate and Committee of Supply sessions then follow, where Members of Parliament can query the Government on the expenditure of funds in the previous FY, as well as the proposed budget for the next FY, for the various ministries and organs of state.
After Parliament passes the Supply Bill, thus giving its approval of the budget, the President then needs to give his assent to the bill before it can come into effect. The President's role is to safeguard the past reserves of the nation, and he may withhold his assent to the Bill if, in his opinion, the estimated revenue and expenditure are likely to draw on Past Reserves.
Once the President gives his assent to the Supply Bill, it is then enacted as law as the Supply Act. The Act will then control the amount of money that the Government may spend in the coming FY, and for what purposes this money may be spent on.
Each year, the Minister for Finance presents the Revenue and Expenditure Estimates to Parliament as part of the annual budgetary process.
The information presented in the Revenue and Expenditure Estimates includes:
1) The Government Budget for the next Financial Year;
2) The Government’s fiscal position for the previous and current Financial Year;
3) Government revenue estimates, which include receipts that are not available for spending by the Government;
4) Government expenditure estimates, organised under Heads of Expenditure; and
5) The audited Statement of the Government’s Assets and Liabilities as at the end of the previous Financial Year. The Government’s accounts are prepared on a cash accounting basis, in accordance with Article 147(5) of the Constitution.
The Revenue and Estimates are on a financial year (FY) basis. The Government's FY is from 1 April of one year to 31 March of the following year. Figures on a calendar year basis are provided in the Economic Survey of Singapore.
The annual Government Budget has been in deficit for 5 years of the last decade. On average, the Overall Budget Balance was close to 0% of GDP
. This means that revenues were matched by expenditures each year, on average over the last decade.
estimate the size of the budget surplus to be larger because they include revenues which the Government is not allowed to spend under the principles laid out by the Constitution – such as revenues from sale of land. They may include all such revenues for ease of comparison with other countries. However, the figures are not relevant to the question of whether the Singapore Government’s Budget is in surplus or deficit, as the Budget should only include revenues that are available for spending by the Government. Please refer to Q8 for further details.
The average Overall Budget Balance from 2001 to 2010 was 0.1% of GDP.
For example, Standard & Poor’s Rating Services have estimated that Singapore's general government surplus averaged 6.7% of GDP between 2006 and 2010 in their latest rating report.
Budget surpluses, if any at the end of each fiscal year, are accumulated as current reserves of each term of government. Similar to Past Reserves, these are also managed by the Government’s investment entities. At the end of each term of government, the accumulated current reserves will be transferred to Past Reserves.
The Singapore Government operates on a balanced budget over each term of Government. It also has a strong balance sheet that has assets well in excess of its liabilities.
The Government does not borrow* to fund its Budget. Under the Government Securities Act, the Singapore Government cannot spend the monies raised from three existing domestic debt securities it issues: Singapore Government Securities (SGS), Special Singapore Government Securities (SSGS), and Singapore Savings Bonds (SSB).
SGS are marketable debt instruments issued for purposes of developing Singapore's debt markets. They provide a risk-free benchmark against which other risky market instruments are priced off.
SSGS are non-tradable bonds issued specifically to the Central Provident Fund (CPF) Board, Singapore’s national pension fund. Singaporeans’ CPF monies are invested in these special securities which are fully guaranteed by the Government. The securities earn for the CPF Board a coupon rate that is pegged to CPF interest rates that members receive.SSB are non-tradable bonds issued to provide individual investors with a long-term saving option.
All borrowing proceeds from the issuance of SGS, SSGS, and SSB are invested. These investment returns are more than sufficient to cover the debt servicing costs.
More details of Singapore Government Borrowings are found here.
*Refers to borrowings through the Government Securities Act.
Yes. This is because the debt comprises Singapore Government Securities, Special Singapore Government Securities, and Singapore Saving Bonds, that are not used for spending. The borrowing proceeds are invested. The Singapore Government has a strong balance sheet with assets well in excess of its liabilities. The Government has significant net assets and no net debt.
Looking only at the liabilities (i.e. debt) alone thus does not discriminate between two countries with the same level of debt but with very different levels of assets. Singapore is in fact a net creditor country, not a debtor country, and is able to earn significant investment income on its net assets.
This is why international credit rating agencies give the Singapore Government the highest short and long-term credit ratings of AAA. In an April 2012 report by BlackRock Investment Institute, Singapore also ranked 2nd in the BlackRock Sovereign Risk Index in terms of creditworthiness. A key strength highlighted was Singapore’s net asset position.
The Overall Budget Balance that is published by MOF and presented to Parliament is based on revenues that the Government of the day can spend under Constitutional principles. The Constitution was amended in 1991 to incorporate a Reserves Protection Framework (see Section II of “Our Nation’s Reserves” for more information).
The Overall Budget Balance therefore excludes revenues that have to be protected as part of Past Reserves. In particular:
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.
2) The Overall Budget Balance also does not include all of the investment income from the reserves. Under the Constitution, only up to 50% of net investment returns on a real basis can be included in the Budget for spending by the Government (see Section II of “Our Nation’s Reserves for more information). The Net Investment Returns Contribution (NIRC) reported in the Budget reflects the amount of net investment returns that is taken into the Budget for spending over the financial year.
While receipts that are not available for spending by the Government are not reflected in the Overall Budget Balance, the information can be found in the Revenue and Expenditure Estimates that is presented annually to Parliament. A copy of this document is available online at http://www.singaporebudget.gov.sg/budget_2014/revenueandexpenditure/RevenueandExpenditureEstimates.aspx.
The Department of Statistics regularly publishes government finance data that follows the IMF presentation format in the Yearbook of Statistics. Singapore subscribes to this IMF format for the purpose of international data reporting.
The IMF presentation format includes all receipts, including land sales proceeds, and total investment income. However, some of these items are not available for spending by the Government under the Reserves Protection Framework in the Singapore Constitution as explained above. They are hence not included in the Government Budget, which portrays the fiscal resources available to the Government for the financial year.
Thus, while the IMF presentation format allows for data to be presented in a common international template, it does not cater to Singapore’s Constitutional provisions that seek to ensure the sustainability of government finances for future generations.
To summarise, the presentation of the Government Budget reflects the fiscal rules prescribed in our Constitution. This set of fiscal rules has served Singapore well, and underpins the sustainability of our public finances. In particular, by preserving Past Reserves, it ensures that NIRC will be available for future generations and not progressively diminished.
You can download the Budget Statement from our website at http://www.singaporebudget.gov.sg/budget_2014/BudgetSpeech.aspx.
The FY2013 version of the Analysis of Revenue and Expenditure is available at http://www.singaporebudget.gov.sg/budget_2014/RevenueandExpenditure.aspx. The Analysis of Revenue and Expenditure for past financial years are available at http://app.mof.gov.sg/singapore_budget_archives.aspx.
The Revenue and Expenditure Estimates for FY2013 is also available online at http://www.singaporebudget.gov.sg/budget_2014/revenueandexpenditure/RevenueandExpenditureEstimates.aspx. Copies of the Revenue and Expenditure Estimates for past financial years are available in the National Library, as well as online at http://app.mof.gov.sg/singapore_budget_archives.aspx.
The information can be obtained from the Statistical Annexes of the Analysis of Revenue and Expenditure. The report is available online at http://www.singaporebudget.gov.sg/budget_2014/RevenueandExpenditure.aspx.
A government endowment fund is a sum of capital money set aside from the government’s annual budget into a fund to provide a stable source of funding for specific programmes which span many years in the future. The principal sum set aside in the endowment fund cannot be spent, and is used to generate a stream of income to finance such programmes on an ongoing basis. Examples include the Lifelong Learning Endowment Fund, ElderCare Fund, Medical Endowment Fund (Medifund), Edusave Endowment Fund and Community Care Endowment Fund (Comcare Fund).
These funds underscore the Government’s commitment to meet important objectives in a sustained way – e.g. helping needy Singaporeans meet their medical expenses (Medifund and Eldercare Fund); and helping Singaporeans with their basic living expenses and children’s educational needs (Comcare Fund). The Government makes top-ups to the endowment funds from time to time to meet the expenditure needs of the respective programmes. This helps to ensure that such programmes are not affected by fluctuations in revenues due to the economic cycle.
Government endowment funds are created by law and further top-ups to the principal sums of the endowment funds require Parliament’s approval. The respective Acts also specify:
(i) how the income of the fund can be spent; and(ii) that audited financial statements be tabled in Parliament every year.
Statutory boards are entities separate from the government, with specific legislation governing their operations. Most statutory boards impose charges on some or all of their services. Statutory boards that do not generate sufficient revenue to meet their expenses would receive grants from the government to finance their operations. These grants are funded from the government's annual budget.
The Gateway Process is a staged approval process that the Government has introduced for large and complex public sector development projects. Large projects carry greater design and implementation risks. The Gateway Process helps agencies to identify and resolve project risks earlier in the project lifecycle. Through greater scrutiny of specifications and design, the Government can also enhance the robustness of proposals and better estimate and manage the costs of such large projects. The process helps to ensure that public projects continue to be delivered in a cost effective manner.
The Centre for Public Project Management (CP2M) is a department under the Ministry of Finance (MOF). It was established to provide expert advice to Government agencies on enhancing project design and management. It also captures learning points from development projects, so as to codify and disseminate these best practices across government agencies.
The Development Projects Advisory Panel (DPAP) comprises members with extensive expertise and experience in project development. The panel helps to review the specifications and design of large public sector projects during the early stages of project conceptualisation.