Forum: Singapore Still Safe With Debt, No Net Debt, Forum News & Top Stories


Professor Linda Lim’s commentary, “Debt is not a bad word, but…” (August 3) refers to Singapore’s gross debt-to-gross domestic product ratio of 131%. This number does not correctly reflect the substantial indebtedness.

Our sovereign debt primarily consists of Singapore Government Securities (SGS) and Singapore Special Government Securities (SSGS). SGS are issued by the Monetary Authority of Singapore (MAS) to develop the domestic bond market, while SSGS are issued for the benefit of the Central Provident Fund to meet its retirement investment needs of Singaporeans.

The proceeds of these instruments are invested and not spent within the framework of the state budget.

Instead, we have positive net assets, i.e. reserves that are invested by MAS, GIC and Temasek.

Indeed, the International Monetary Fund, as well as the rating agencies, recognize this. This is why Singapore has an AAA rating.

Singapore has always been and will continue to be debt cautious.

As Professor Lim agrees, debt can be useful as a financing tool. In May, Parliament passed the Bill on Government Loans for Major Infrastructure Act (Singa). This allows the government to borrow for large, long-term infrastructure projects, such as new MRT lines.

These are projects that benefit all Singaporeans, across generations.

But debt is not income. The “exorbitant privilege” that the United States has of having high debt due to the US dollar being a reserve currency is not available to most other countries.

Debt incurred for spending beyond one’s means must be repaid, one way or another.

Lim Zhi Jian

Director, Reserves and Investment

Ministry of Finance

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