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[h=2]IMF/MOF amends S’pore accumulated surplus figure after Prof Balding publishes article[/h]
September 23rd, 2012 |
Author: Editorial
In the article written by Prof Balding, ‘The IMF Re-Re-Statement of Singaporean Public Finances‘, he revealed that the International Monetary Fund (IMF) has quietly changed its data after he wrote about IMF restating the historical Singaporean public surplus by an astounding $158 billion SGD in Jul [Link].
The IMF increased the size of the Singaporean government surplus from $271 billion SGD to $429 billion SGD between 1990 and 2010 during a re-statement exercise in Apr this year. Apparently, the increase in the surplus came not from an increase in revenue but rather a decrease in government expenditure. Prof Balding has written about this in his Jul article.
However, in Aug, when he revisited the IMF World Economic Outlook database to double check the numbers, he found that IMF had changed the figures again, amending the ones they re-stated or changed in Apr.
The Singaporean govt surplus figures between 1990-2010:
IMF Sep 2011 – $271 billion SGD
IMF Apr 2011 – $429 billion SGD (re-statement exercise)
IMF Aug 2011 – $267 billion SGD (current data, changed after Prof Balding wrote his Jul article)
To see the current figures, go to the IMF World Economic Outlook database [Link] and select ‘Singapore’. Select ‘General government revenue’ and ‘General government total expenditure’ to generate the figures. Take the Revenue and minus the Expenditure to get the surplus figure. This figure is also the same as the ‘General government net lending/borrowing’ figure.
Like what Prof Balding has discovered, the current surplus figure is now back to near its original value as stated in Sep 2011. The difference between the original value of $271 billion SGD and the current value of $267 billion SGD is slightly more than $4 billion SGD. In other words, the IMF has magically made a $158 billion SGD re-stated surplus appear in Apr and then disappear in Aug.
Now, the increase in surplus by an astounding $158 billion to $429 billion in IMF’s Apr figures may appear to be a good thing on the surface but it is not. So, what is the implication of having a large accumulated surplus in the case of Singapore?
As of 31 Mar 2011, Singapore balance sheet listed $705 billion in assets but also $359 billion in debt giving it only $346 billion in net equity. In other words, it showed that Temasek Holdings and GIC had managed to turn $429 billion in surplus (i.e, accumulated from 1990-2010) into $346 billion in net equity. Which means, the larger the accumulated surplus, the larger the losses and discrepancies in Temasek and GIC. There is no way Temasek and GIC’s claims of their long term returns can be considered accurate. $429 billion in accumulated surplus does not turn into $346 billion in net equity by earning 7-17% over more than twenty years.
After Prof Balding published an article highlighting this in Jul, something magically happened. And by Aug, IMF has quietly reduced its figures giving the accumulated government surplus figure from 1990 to 2010 as $267 billion.
When Prof Balding contacted IMF about the matter, IMF initially responded that the data was changed in Aug to “address some technical issues”. When asked about the nature of the “technical issues”, IMF said that “backward extrapolation erroneously assumed” the Apr figures which was published in error. The IMF also said that the 1990-2002 was mistakenly estimated on the year 2003 expenditure level, which remains unchanged, prompting a large shift in the total surplus from 1990-2010. In short, IMF is saying it was an honest mistake.
However, it’s unclear whether it is the IMF or Singapore MOF which is making the honest mistake because according to information on IMF’s website, IMF said that the “national statistical agencies are the ultimate providers of historical data and definitions”:
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In the article written by Prof Balding, ‘The IMF Re-Re-Statement of Singaporean Public Finances‘, he revealed that the International Monetary Fund (IMF) has quietly changed its data after he wrote about IMF restating the historical Singaporean public surplus by an astounding $158 billion SGD in Jul [Link].
The IMF increased the size of the Singaporean government surplus from $271 billion SGD to $429 billion SGD between 1990 and 2010 during a re-statement exercise in Apr this year. Apparently, the increase in the surplus came not from an increase in revenue but rather a decrease in government expenditure. Prof Balding has written about this in his Jul article.
However, in Aug, when he revisited the IMF World Economic Outlook database to double check the numbers, he found that IMF had changed the figures again, amending the ones they re-stated or changed in Apr.
The Singaporean govt surplus figures between 1990-2010:
IMF Sep 2011 – $271 billion SGD
IMF Apr 2011 – $429 billion SGD (re-statement exercise)
IMF Aug 2011 – $267 billion SGD (current data, changed after Prof Balding wrote his Jul article)
To see the current figures, go to the IMF World Economic Outlook database [Link] and select ‘Singapore’. Select ‘General government revenue’ and ‘General government total expenditure’ to generate the figures. Take the Revenue and minus the Expenditure to get the surplus figure. This figure is also the same as the ‘General government net lending/borrowing’ figure.
Like what Prof Balding has discovered, the current surplus figure is now back to near its original value as stated in Sep 2011. The difference between the original value of $271 billion SGD and the current value of $267 billion SGD is slightly more than $4 billion SGD. In other words, the IMF has magically made a $158 billion SGD re-stated surplus appear in Apr and then disappear in Aug.
Now, the increase in surplus by an astounding $158 billion to $429 billion in IMF’s Apr figures may appear to be a good thing on the surface but it is not. So, what is the implication of having a large accumulated surplus in the case of Singapore?
As of 31 Mar 2011, Singapore balance sheet listed $705 billion in assets but also $359 billion in debt giving it only $346 billion in net equity. In other words, it showed that Temasek Holdings and GIC had managed to turn $429 billion in surplus (i.e, accumulated from 1990-2010) into $346 billion in net equity. Which means, the larger the accumulated surplus, the larger the losses and discrepancies in Temasek and GIC. There is no way Temasek and GIC’s claims of their long term returns can be considered accurate. $429 billion in accumulated surplus does not turn into $346 billion in net equity by earning 7-17% over more than twenty years.
After Prof Balding published an article highlighting this in Jul, something magically happened. And by Aug, IMF has quietly reduced its figures giving the accumulated government surplus figure from 1990 to 2010 as $267 billion.
When Prof Balding contacted IMF about the matter, IMF initially responded that the data was changed in Aug to “address some technical issues”. When asked about the nature of the “technical issues”, IMF said that “backward extrapolation erroneously assumed” the Apr figures which was published in error. The IMF also said that the 1990-2002 was mistakenly estimated on the year 2003 expenditure level, which remains unchanged, prompting a large shift in the total surplus from 1990-2010. In short, IMF is saying it was an honest mistake.
However, it’s unclear whether it is the IMF or Singapore MOF which is making the honest mistake because according to information on IMF’s website, IMF said that the “national statistical agencies are the ultimate providers of historical data and definitions”:
“The World Economic Outlook (WEO) database contains selected macroeconomic data series from the statistical appendix of the World Economic Outlook report, which presents the IMF staff’s analysis and projections of economic developments at the global level, in major country groups and in many individual countries. The WEO is released in April and September/October each year.
Data and projections for 184 economies form the statistical basis of the World Economic Outlook (the WEO database). The data are maintained jointly by the IMF’s Research Department and regional departments, with the latter regularly updating country projections based on consistent global assumptions.
Although national statistical agencies are the ultimate providers of historical data and definitions, international organizations are also involved in statistical issues, with the objective of harmonizing methodologies for the compilation of national statistics, including analytical frameworks, concepts, definitions, classifications, and valuation procedures used in the production of economic statistics. The WEO database reflects information from both national source agencies and international organizations.”
.Data and projections for 184 economies form the statistical basis of the World Economic Outlook (the WEO database). The data are maintained jointly by the IMF’s Research Department and regional departments, with the latter regularly updating country projections based on consistent global assumptions.
Although national statistical agencies are the ultimate providers of historical data and definitions, international organizations are also involved in statistical issues, with the objective of harmonizing methodologies for the compilation of national statistics, including analytical frameworks, concepts, definitions, classifications, and valuation procedures used in the production of economic statistics. The WEO database reflects information from both national source agencies and international organizations.”
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