Rebutting “Factually” and Kenneth Jeyaretnam

There are so many inaccuracies and lies on the “Factually” website in its rebuttals of my arguments about Singapore, Temasek Holdings and GIC data that I was preparing a multipart series on the topic.  However, now the government of Singapore and Kenneth Jeyaretnam have teamed up to spread absolute lies about what I have said.  Rather than present a full rebuttal of the lies spread by “Factually” and Mr. Jeyaretnam I am only going to address the lies he recently posted.

Point #1: Not all Funds Flowed to GIC

Factually:            Some of the confusion created by these recent “estimates” of GIC’s assets arises from the following errors.  First they assume that all the governments available funds are flowed to GIC alone.  The Government has significant deposits placed in MAS.  As of March 31, 2012, the government has $147 billion deposited with MAS….

Me:                        The government of Singapore has an official balance sheet as of March 31, 2011 listing $705 billion SGD of assets and of that $125 billion SGD is in cash.

                                I clearly note that money has flowed into government cash holdings.

Point #2: Debt Servicing Cost Not Included

Factually:  Second, debt servicing costs are sometimes ignored in these estimates.

KJ:  MICA are referring to Chris Balding’s analysis.

Me:  I had prepared estimates on the impact of the debt service cost and I believe that these estimates were on my first website which was suspiciously hacked.  I was unable to recover all the material from there.  I have previously dated spreadsheets with debt servicing costs included.  Here you can find my version of the most recent estimate of how much Singapore Inc. should have under management including debt service costs.  The interest cost of debt is taken from the Central Provident Fund (CPF) website which you can find here.  To simplify and be conservative, I used the highest listed interest rate for any single year.  In short, even being conservative, when factoring in currency costs, debt service costs, among others, Singapore Inc. should still manage at a minimum, $1.2 trillion SGD. Kenneth Jeyaretnam’s estimates are grossly wrong for two reasons.  First, he assumes a static 3% debt service cost going back to 1974.  That is obviously wrong.  Second, he discounts all returns by 3% rather than the amount of debt outstanding.  This creates an enormous discrepancy between the final number.

Point 3:  General vs. Operational Surpluses

Factually:Third, they overestimate the funds flow into GIC by including the interest and dividend income that the Government gets on its investment.  These estimates incorrectly assume the full amount of government budget surpluses as fresh fund injections, without first removing the interest and dividend income portion.

KJ:  Chris Balding was using the general government surplus numbers and then compounding these surpluses at a carry rate of 7%.

Me:  Here is links to what I have actually written.  a)  We have been working with official Singaporean general and operational budget revenue, expenditure, and surpluses.  The general and operational data comes from both Statistics Singapore and the International Monetary Fund.

b)  Singaporean data indicates that operational surpluses and public borrowing from 1974 to 2011 totaled between $645-701 billion SGD.

c)  Since 1974, Singapore has run operational surpluses of $279 billion according to the IMF.

I have used both operational and general using both Statistics Singapore and IMF data.  Regardless of which numbers are used, enormous discrepancies remain.  It is completely false to accuse me of using the general numbers.

In closing, I would like to make two brief points.  First, Kenneth Jeyaretnam has begun to attack me and make false accusations about me because I refused his offer to co-author everything I write with him.  I will not implicitly or explicitly endorse or associate myself with any Singaporean political party or figure.  I will answer questions or help anyone who asks but I will not endorse any party or figure and this is a policy I will continue.  I put these figures and research forward for others to use as they choose, not to promote a party or person.

Second, I will hopefully return to my plan to rebut point by point the issues raised by the Singaporean government on “Factually”.  Even when factoring in all these issues raised by the Singaporean government, this does not change the fundamental problem that enormous discrepancies remain in Singaporean public finances.

“Factually” Incorrect: The IMF Restatement

It has been brought to my attention that the Singapore government has created website called Factually where they “present the facts.”  On this website they address such issues as “why did the IMF restate Singapore’s fiscal data?” and “Is there something wrong with our Reserves?”  In these “factual” articles by the Singaporean government they complain about “recent online articles” questioning the veracity and reliability of Singaporean data.  As I have had people, both those criticizing and encouraging me, to respond, I will respond to the Singaporean governments response.

I will begin with their short response to the IMF restatement of Singaporean public finance data.  There are two primary points about the Singaporean response.  First, it says nothing.   All of the information put forward in their response could have been written by someone with no knowledge of Singaporean public finances who did nothing more than read my original blog post.  Here are some side by side comparisons:

1a.          The IMF increased the size of the Singaporean government surplus from $271 billion SGD to $429 billion SGD between 1990 and 2011.

1b.          The restatement increased the figure for the cumulative government surplus for the period 1990-2011 from $271bn as reported in the WEO database in September 2011 to $429bn in April 2012.

2a.          The IMF initially responded by saying the re-restatement in August of 2012 was to “address some technical issues” with the original restatement.

2b.          The restatement of data in the WEO database was due to technical errors in the course of an IMF data migration exercise.

3a.          The difference between the original value of $271 billion SGD and the re-restated value of $267 billion SGD is slightly more than $4 billion SGD.

3b.          The IMF corrected the errors in August 2012 when it reported a cumulated government surplus of $267bn for the period.

Without looking, can you tell which is which?  In short, there is virtually no information contained in their response that was not contained in my original post.  There is no response other than to restate what I stated in my blog.  That is not much of a response but I am impressed that the Singapore government will use what I have written.

Second, the Singaporean governments response is completely wrong on the most important factual point about the restatement.  The Singaporean government writes that they had been accused of “under-reporting our government revenues and surpluses.”  This is a flat out lie.

I write about the restatement that “most interestingly, the increase in the surplus came not from an increase in revenue but rather a decrease in government expenditure.”  I specifically say that the IMF data increasing the surplus did not come from a change in revenue.  In other words, the Singaporean government is accusing me of saying things that I emphasize are not true.

The Singaporean government does not respond to what I say so much as say the same thing that I say except for the section where they purposefully accuse me of saying something where I clearly said the opposite.  It is therefore very difficult to see how the Singaporean government actually disagrees with me here or where they take issue with what I said.

The last point is that at no point in the post about the fiscal restatement does Singapore dispute what I say is the most important point: with or without the restatement there remain “remain enormous discrepancies in Singaporean public finances.”  With or without the IMF restatement, there remain large discrepancies in Singapore data and they are not addressed.

In summation, the Singapore government merely restates what I said and lies about the primary fact in question.  Hopefully, they will become more truthful about data and their statements about it.