Parliamentary Replies

Parliamentary Question by Assoc Prof Jamus Jerome Lim:

To ask the Deputy Prime Minister and Minister for Finance (a) what is the Government’s accounting practice for development expenditure; (b) what are the reasons for using such accounting practice; and (c) whether such accounting practice results in the full expense of the development expenditure at the point of appropriation rather than as the funds are disbursed.

Parliamentary Reply by Deputy Prime Minister, and Minister for Finance Mr Lawrence Wong:

The Government keeps its accounts on the cash basis of accounting in accordance with Regulation 19 of the Financial Regulations. Under this accounting practice, a transaction is recorded when cash is received or paid. Therefore, development expenditures are recorded as expenditure in the Statement of Development Fund of the Government Financial Statements when funds are disbursed in tandem with the progress of the projects.

Accordingly, we will look at the annual cash requirements for both operating and development expenditures to determine the Government’s Overall Fiscal Position (OFP) and the Budget available for spending each year. But for major long-term infrastructure projects which are financed through borrowings under the Significant Infrastructure Government Loan Act (SINGA) and capitalised as assets, we will use the annual depreciation and borrowing costs to derive the OFP rather than the full cash requirements.