Some observers have pointed out that Singapore has a high level of debt as a percentage of our Gross Domestic Product (“GDP”). Some may wonder why this is so given that the Government runs a balanced budget, and whether it is fiscally sustainable. We explain why Singapore takes on such debt.
A country’s debt position is commonly measured by its gross debt-to-GDP ratio, which compares a country’s public debt to its economic output. While Singapore’s gross debt-to-GDP ratio may appear large on its own, it does not consider Singapore’s sizeable asset position.
In fact, the Singapore Government has a strong balance sheet with no net debt. Our financial assets are well in excess of our debt. This net asset position is reflected in the net investment returns generated on our reserves, which is made available for Government spending via the Net Investment Returns Contribution. In addition, our strong balance sheet explains why Singapore receives the top credit rating of AAA from the three leading international credit-rating agencies (S&P, Moody’s, and Fitch).
The Singapore Government does not borrow for recurrent spending needs. Instead, the Government issues debt to meet specific long-term objectives:
| S/N | Objective of issuing debt | Description | Examples |
| 1 | To facilitate debt market development and other non-spending purposes | Borrowings issued under the Government Securities (Debt Market and Investment) Act. The proceeds from such borrowings are invested as part of our reserves and cannot be spent.
| Publicly Held
Non-Publicly Held
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| 2 | To finance nationally significant infrastructure | Borrowings issued under the Significant Infrastructure Government Loan Act (“SINGA”). Such borrowings are raised within the legislative safeguards that include a gross borrowing limit and the proceeds can only be spent on qualifying nationally significant infrastructure projects. |
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For more information on Government borrowings, click here.
For more information on Singapore’s reserves, click here.
