Singapore—One of the proposals made by Workers’ Party (WP) Member of Parliament Jamus Lim (Sengkang GRC) last week in Parliament was for the country to set up an independent fiscal council.
Dr Lim, an Associate Professor in Economics, said such a council would improve all major policy proposals for budgetary and macro purposes.
He said on Friday (Feb 26) that establishing a fiscal council now would be especially timely, given the uncertain economic environment as well as the Budget deficit.
“Fiscal councils can improve fiscal performance, especially when such councils enjoy legal and operational independence, are tasked with monitoring fiscal rules, and when supported by robust media presence.
He added that advanced economies, such as the Netherlands, the United States, Canada, and the United Kingdom, have fiscal councils.
“I propose that the Ministry of Finance consider the formation of an independent fiscal council, the Parliamentary Budget Office of Singapore, seeded with an initial S$20 million, and tasked with the mandate to score all major policy proposals formally advanced by Members of Parliament, for budgetary and macro implications,” said Dr Lim.
Ms Indranee Rajah, the Second Minister for Finance, took issue with him. She said such councils, which she referred to as Independent Fiscal Institutions (IFIs), were established after the global financial crisis in 2008 and 2009 for avoiding financial crises in the future.
But that was not the situation in Singapore, she added.
“The context in Singapore is very different. The ills which led to the need for IFIs in other systems are not present in our system and we continue to keep a very strict eye on our fiscal prudence.”
The country’s financial standing is strong, she added, citing Singapore’s AAA credit rating and balanced budgets in each term of Government as examples.
Additionally, the country has robust measures to “scrutinise spending and debate budgetary matters, without incurring the costs of setting up additional fiscal monitoring institutions.”
Ms Indranee also said that other countries’ IFIs are not faultless either. The Office of Budget Responsibility in the UK has come under criticism for “overly optimistic forecasts and has had to downgrade its forecasts several times since it was set up”, she added.
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