Thursday, February 21, 2013

Where are the missing billions?

1. Someone asked me to give my views the articles written by Professor Christopher Balding regarding the finances of the Singapore Government. A summary of his article is shown here:

2. Here are the key points:

a) During a period of 20 years from 1991 to 2010, the Singapore government borrowed $250 billion and had a budget surplus of $262 billion, making a total of $512 billion.

b) If this money is invested to earn the average yield, it should accumulate to $1,000 billion, or $1 trillion.

c) The total assets of Temasek Holdings and GIC is estimated to be $500 billion, a part of which were accumulated prior to 1990. According to Professor Balding, there must be more than $500 billion in assets that are missing?

d) There are $300 billion in foreign reserves managed by the Monetary Authority of Singapore. Professor Balding argued that this is accounted by the current account surplus, and is not related to the $500 billion that is missing.

3. Can you identify some possible gaps in the reasoning given by Professor Balding? I do not agree with his reasoning, so there is the possibility that he is right, or maybe wrong.


yujuan said...

Amazing that it takes such a long time for someone local having the guts to bring this intriguing topic out into the open for discussion.
The official Reserves and borrowings are such a hush hush affair, and we easily conclude only the Lee ruling family has the answer.
Treading into dangerous waters with legal threats of defamation hovering over our heads, guess even the most respected economist/expert in Singapore would not sincerely dare to broach this sensitive topic, only an outsider like Prof Balding residing outside Singapore would dare.
Most citizens would wanna know, but dun know how, and we have to depend on foreigners like Balding to put us into the know. Whether Balding is right or wrong dun matter, but the seed of suspicion has been established or reignited,
given all the secrecy and non transparency surrounding GIC's and Temasek Holdings' operations.
Why ordinary folks interested? We dun know whether our CPF savings are still in the CPF's piggy Bank or not. This is our greatest worry.

Fook Cheon Khaw said...

Does our President know what is going on with the money in CPF?

Terence Soon said...

The whole problem with this is that our current president is jiak liao bee. He's just full of empty promises, and cannot even stand up for the citizens for the population white paper issue. What more for our national reserves??

Those people who voted for him must be regretting and smacking themselves now.

Lye Khuen Way said...

Frankly, I wonder why no one from our PM down to the last Civil Servant never care to write a rebuttal,if what the Prof wrote was totally incorrect .
My instinct is that the Prof must have stumbled upon some dark secret.
So can we have some light ?

He Da Nai said...

I think the amt managed by MAS is leased out to GIC.

This is explained by KJ in his list of articles on the reserves.

As a result, it is not sensible to add the MAS reserve to that of GIC+TH. Add the 2 tantamount to double counting.

According to KJ of reform party, the net equity of MAS is only 10 billion.

if you examine the explanation given by MOF on Balding's article, you would realise that they didn't consider MAS AUM, they only attack it from the angle that not all the surplus is fed into GIC/TH for investment, hence the discrepancies is a lot less.

Balding counted that point as well.

so far, we haven't hear any counter argument from MOF.

He Da Nai said...

Also, after balding published his suite of articles on GIC/TH return figures, GIC/TH reduce their return numbers .

There is really no basis for GIC.TH return numbers. Balding explained it pretty well.

He Da Nai said...

counting in MAS reserve is like double counting.

mas reserve is managed by GIC largely.

Kooli said...

It would be appreciated if we can read the full paper by Prof Balding.

The worry group: Prof Balding & Marxist

The no worry group: Capitalist and international investor. Short term SG gov bond sales were always over subscribed by billions. The yield is less than 1%. Why are they so attractive?

He Da Nai said...

where is the marxism in Prof Balding's comment?

as to why Singaporeans bonds are oversubscribed?
who are the buyers first?
this kind of subscription can be faked. just like property developer getting people to queue before a condo launch.

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