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The Straits Times (4 Aug) - Singapore is always prudent with debt, with no net debt

04 Aug 2021

Professor Linda Lim's commentary, "Debt is not a dirty word, but..." (Aug 3) refers to Singapore's gross debt to gross domestic product ratio of 131 per cent. This number is not a correct reflection of substantive indebtedness.

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

The proceeds from these instruments are invested, and not spent as part of the government Budget.

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

Indeed, the International Monetary Fund, as well as credit ratings agencies, recognise this. That is why Singapore has an AAA rating.

Singapore has always been prudent with debt, and will continue to be so.


As Prof Lim agrees, debt can be useful as a financing tool. In May, Parliament passed the Bill for the Significant Infrastructure Government Loan Act (Singa). This allows the Government to borrow for major, 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 in running 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 has to be repaid, in one way or another.

Lim Zhi Jian

Director, Reserves and Investment

Ministry of Finance