Pofma correction orders issued to ex-GIC economist, The Independent Singapore over false claims on Govt’s fiscal surpluses

Former GIC chief economist Yeoh Lam Keong and The Independent Singapore have been ordered to put up corrections over the false statements. PHOTO: ST FILE

SINGAPORE - Former GIC chief economist Yeoh Lam Keong and alternative news site The Independent Singapore have been ordered under the fake news law to put up corrections over false statements about the Government’s fiscal surpluses.

The Ministry of Finance (MOF) said on Friday that Mr Yeoh’s claim in two Facebook posts dated Nov 7 that there are $30 billion in structural fiscal surpluses that are available to the Government for spending is untrue.

The Independent Singapore subsequently reproduced Mr Yeoh’s statement in two of its articles on Nov 9 and Nov 12.

On Friday, MOF said Finance Minister Lawrence Wong has instructed the Protection from Online Falsehoods and Manipulation Act (Pofma) Office to issue correction directions to Mr Yeoh and The Independent Singapore.

Both will be required to insert a notice against the original offending online posts or articles, with a link to the Government’s clarification. They will not have to take down or edit the post, and the direction does not impose criminal sanctions.

The notice with a link to the Government’s clarification has since been inserted.

MOF said that over the last two decades, excluding the 2020 financial year, which showed a significant fiscal deficit due to Covid-19 expenditures, the Government recorded on average a fiscal balance of $2.2 billion a year.

Noting that the Constitution defines clearly the fiscal rules for the Government, MOF said: “Any public spending beyond these fiscal rules means that we will be using more from the past reserves and leaving behind less for the next generation.”

“Furthermore, the Government is not in a position to freely or unilaterally decide to spend any part of the past reserves. Any drawing of the past reserves is subject to the President’s concurrence,” added the ministry.

This is the second correction direction issued to Mr Yeoh in the space of five weeks, the first being on Oct 14 over false and misleading statements about the Housing Board’s deficits and Singapore’s past reserves. Alternative news site The Online Citizen was also issued a correction direction over the same statements.

The latest correction direction involved two Facebook posts by Mr Yeoh on Nov 7, in which he had questioned the need to raise the goods and services tax (GST) in the coming years and stated that the increase “seems completely unnecessary at the moment as we have a $30 billion structural fiscal surplus that we have not even begun to publicly delineate clear big spending plans for”.

He had also expressed his views that Singapore’s reserves would “grow very strongly at the rate of $50 to $100 billion a year for the next five to 10 years” because of balance of payment surpluses.

Mr Yeoh said the balance of payment surpluses would contribute higher net investment returns over the medium to longer term and, thus, give “a fair chance” that the GST increase may not be needed at all. This view was also reproduced by The Independent Singapore in its article on Nov 9.

In additional clarifications on Factually, MOF said it is misleading to suggest that the balance of payment surpluses will lead to reserves growing very strongly for the next five to 10 years.

The Constitution defines the reserves as the total assets less total liabilities of the Government and other entities, such as the Monetary Authority of Singapore (MAS). The assets include the official foreign reserves held by MAS.

The ministry said that while the balance of payment surpluses would correspond to an increase in official foreign reserves assets, this increase does not result in an equivalent increase in the reserves.

This is because the increase in official foreign reserves assets may be matched by increases in MAS’ liabilities, said MOF.

It added that it is “speculative” to suggest that MAS’ official foreign reserves will continue to grow at the same rate as historical balance of payment trends.

“While MAS has had a steady accumulation of official foreign reserves in recent years, this took place during a period of unprecedented monetary easing globally. The same monetary conditions are now turning with global central banks tightening monetary policy aggressively,” said MOF.

It added that trends in official foreign reserves accumulation will change against this evolving global monetary backdrop.

MOF said that Mr Yeoh’s view of strong reserves growth and higher net investment returns contribution giving the Government a fair chance at addressing spending needs is “misguided”.

The ministry said returns from the investment on Singapore’s reserves are more likely to slow over time, given the structural challenges in the world, including rising geopolitical tensions, climate change and ageing populations.

In the past five years, the net investment returns contribution provided an average annual revenue stream of about 3.5 per cent of gross domestic product (GDP), said MOF. It added that it had previously explained that the net investment returns contribution is expected to keep pace broadly with economic growth over the medium to longer term.

“That means that as government spending continues to increase as a share of GDP, we will need to rely on other revenue sources to close the funding gap,” said MOF.

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