This paradox — high gross public debt without fiscal stress — can be explained by three structural features that fundamentally distinguish Singapore’s public debt from most advanced economies.
Net asset position
Singapore has a net asset position which gross debt figures do not reflect. Supported by disciplined fiscal management and prudent borrowing, the government has accumulated strong fiscal buffers.
The net asset position is reflected in significant net investment returns generated on Singapore’s reserves. If government assets were inadequate to meet its liabilities, net investment returns would not be able to contribute positively to the budget.
This net asset position underpins Singapore’s AAA sovereign credit ratings from S&P Global Ratings, Moody’s and Fitch Ratings.
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Debt raised mainly for non-spending purposes
Here is where Singapore diverges sharply from most advanced economies. Unlike countries that borrow primarily to finance budget deficits or fund government spending, Singapore’s public debt is largely used to meet specific long-term objectives. All government debt is domestically issued, with around 99% raised for non-spending purposes (figure 1).
Non-spending purposes debt instruments are domestic debt instruments issued under the Government Securities (Debt Market and Investment) Act (GSA) 1992. Proceeds raised under this Act are invested and cannot be spent.
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Publicly held domestic debt instruments, such as Singapore Government Securities (SGS) (Market Development) and Treasury Bills, are issued primarily to develop the country’s debt markets.
Non-publicly held domestic debt instruments include Special Singapore Government Securities (SSGS) issued to meet the investment needs of the Central Provident Fund (CPF) — Singapore’s mandatory social security savings scheme — and Reserves Management Government Securities (RMGS) issued to the Monetary Authority of Singapore (MAS) to facilitate transfer of Official Foreign Reserves (OFR) above what the central bank requires to the government for longer-term investment.
Only about 1% of Singapore’s gross public debt is linked to specific spending purposes, issued under the Significant Infrastructure Government Loan Act 2021 (SINGA). These comprise Singapore Government Securities (Infrastructure) and Green Singapore Government Securities (Infrastructure).
Borrowing proceeds from Singapore Government Securities (Infrastructure) are used to fund nationally significant infrastructure projects — the kind of long-lived assets that will serve the nation for generations.
Borrowing proceeds from Green Singapore Government Securities (Infrastructure) specifically target infrastructure that qualifies as eligible green expenditure under the Singapore Green Bond Framework, aligning fiscal management with environmental objectives.
Strong fiscal framework
Singapore’s fiscal credibility rests on an exceptionally strong institutional framework characterised by robust governance, long-term planning and a culture of fiscal prudence.
At its core is the balanced budget rule over each term of government, which prevents the accumulation of fiscal deficits. This is reinforced by the constitutional framework protecting past reserves, allowing their use only in times of need.
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Borrowings under SINGA also come with important safeguards: an overall gross borrowing limit of $90 billion and an annual interest threshold of $5 billion.
Eligible projects must meet stringent criteria. They must be large-scale, with a minimum cost of $4 billion, have a long useful life of at least 50 years, generate productivity gains or improve economic, social and environmental sustainability. And they must be government-owned.
These requirements ensure that SINGA infrastructure projects deliver lasting value to the nation.
Beyond formal rules and regulations, fiscal policy is guided by long-term planning. The government explicitly prepares for structural challenges such as population ageing and climate risks, while maintaining a prudent approach to borrowing.
Crucially, borrowing is prohibited for recurrent expenditures to avoid burdening future generations with debt incurred by current and previous generations.
Vigilance needed
While Singapore’s high gross public debt is largely much ado about nothing, its net asset strength and fiscal buffers cannot be taken for granted.
Rising spending pressures from population ageing, climate change and other long-term structural challenges could strain the current fiscal framework.
Policymakers must remain committed to Singapore’s principles of robust fiscal governance, forward-looking fiscal planning and prudent resource management.
Fiscal institutions must continue to be carefully stewarded to remain credible, resilient and aligned with long-term fiscal sustainability.
Tee Koon Hui is a senior economist at AMRO
