External debt figures on Singapore 'misleading'

External debt figures on Singapore 'misleading'

SINGAPORE (AFP): The Singapore government said Monday a report by the World Bank, IMF and two international agencies that Singapore's external debt had hit more than US$200 billion was misleading.

Based on the International Working Group on External Debt, Singapore's external debt dipped to $219.99 billion in June 1999 from $265.37 billion in December 1998.

The figures meant Singapore's debt to gross national product and debt to export ratios were at critical levels of 297 percent and 415 percent respectively.

"This suggests that the size of our external debt is much larger than our economy," the Singapore department of statistics said in a special report released to the media Monday.

"It may give the erroneous impression that we would have difficulties sustaining our external debt in a currency crisis. This is very misleading," it said.

Apart from the World Bank and the International Monetary Fund, the International Working Group on External debt consists of the Switzerland-based Bank for International Settlements, which is the central bank of all central banks, and the Paris-based Organization for Economic Cooperation and Development, a club of rich nations.

The Singapore department of statistics said based on its own calculations, the island state's external debt was a modest $14.73 billion as at end-1998, down 11 percent from a peak 16.5 billion at end-1997.

The department said its definition of external debt was narrower than the broad definition advocated by the international agencies, which included inter-bank loans.

Singapore defines its total external debt as all overseas loans drawn by its corporate, government and household sectors but excludes overseas inter-bank loans of the island state's banks.

It also does not include secondary forms of external debt, like debt securities.

The department of statistics explained that Singapore, being a key financial center, was host to a large number of global funds whose branches here operated as intermediaries for their head offices to channel loan funds to the region in the form of inter- bank loans.

"The inclusion of inter-bank loans and non-residents' bank deposits will exaggerate the extent of Singapore's financial liabilities to non-residents and distort the underlying economic realities," the department said.

It would also "exaggerate Singapore's vulnerability and financial risks."