Fiscal prudence helps Singapore avoid public debt problem: Josephine Teo
- POSTED: 09 Oct 2013 20:32
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A prudent approach to fiscal management has helped Singapore avoid the problem of public debt which beset many governments today, according to Senior Minister of State for Finance and Transport Josephine Teo.
SINGAPORE: A prudent approach to fiscal management has helped Singapore avoid the problem of public debt which beset many governments today.
This is according to Senior Minister of State for Finance and Transport Josephine Teo.
Mrs Teo added that this fiscal prudence has enabled the country to build up a healthy pool of reserves.
The US, the world’s largest economy, has the highest national debt level globally -- at S$20 trillion (US$16 trillion), its national debt is above 70 per cent of its Gross Domestic Product (GDP).
And in order to avoid defaulting on its financial obligations, the US will have to overcome political differences and pass a bill to raise the country's debt ceiling.
In Singapore, the level of outstanding government debt stood at S$354 billion as at December 2011, or 108 per cent of GDP, according to the government's Accountant-General's Department.
Speaking at an accountancy conference, the Certified Practising Accountants (CPA) Congress 2013, Mrs Teo stressed that Singapore's assets substantially exceed the debts.
Mrs Teo said: “Singapore's reported public debt level is also high relative to our GDP, but the nature of public debt in Singapore is fundamentally different from that in the US and most other countries. The Singapore government does not borrow to spend, nor do we have any external debt.
“The reported public debt in fact comprises securities issued for two main purposes -- to meet the investment needs of the Central Provident Fund, which is Singapore's mandatory defined social security scheme, and to develop the domestic debt market."
The assets also generate investment returns of S$8 billion to the government's revenues each year, funding around 16 per cent of annual expenditure.
These help fund social and economic programmes to benefit Singaporeans.