Singapore achieved S$6.4 billion Budget surplus in fiscal year 2007 (equivalent to 2.7% of GDP) against S$0.7 billion deficit forecasted. The variance is a humongous SGD $7.1 billion between actual and budgeted.
The Finance Ministry has been urged to improve its fiscal marksmanship. Mr Tharman attempted to explain the variance in Parliament on Feb 27, 2008.
At the time of the Budget last year, the finance ministry estimated 2006 stamp duties to be $1.5 billion and hence projected the same level for 2007 on the basis that 2006 was itself already an exceptional year for property.
After the budget was released, the data showed a significant increase in stamp duty collection for Jan-Mar FY2006 to $2 billion, not $1.5 billion figure used at the time of preparing the Budget. Eventually, the property market accounted for more than $3.5 billion in extra revenues, lifting the budget surplus for FY2007 to $6.4 billion.
Well Mr Tharman has explained SGD$2 billion of the SGD$7.1 billion variance, how about the rest of the variance?
There was also uncertainty on whether the buoyancy in luxury projects would filter through to the rest of the property market. They did not expect the surge in the volume of transactions.
Singapore is a very open economy and thus very expose to external factors, positively and negatively.
I wonder we can quote Mr Tharman when we miss our business targets and hope our bosses will still see us positively by saying, “We cannot expect too much prescience in the budget planning process.”
Our bosses may respond, “Mr Tharman is running the country’s finances while you are just running a department’s/section’s finances.”
For the record, there had been six instances of over-projection in the Budget positions in the last 10 years.
Reference – Chen Hui Fen, Govt uses ‘realistic’ assumptions instead of ‘optimistic’ ones, Business Times, 27 Feb 2008.