SINGAPORE: The COVID-19 crisis has re-affirmed the value of Singapore’s key institutions and the key tenets of the country’s “prudent fiscal policy”, said Deputy Prime Minister Heng Swee Keat on Tuesday (Apr 7).
These include spending prudently, investing wisely and planning consistently for the long-term, he said in his round-up speech for the Solidarity Budget - Singapore’s third round of support measures in response to the coronavirus outbreak.
He noted that almost S$60 billion was being dedicated to “deal decisively” with the crisis.
“The three Budgets make up our largest Budget in any one financial year, in dollar amount and as a percentage of GDP,” said Mr Heng, who is also the Finance Minister.
“This is the largest spending in any financial year, in our nation’s history.”
He noted that the Government had twice sought President Halimah Yacob’s approval to draw on Singapore’s reserves in the last two months, with the President giving her in-principle support to draw up to S$21 billion from the country’s past reserves.
“As Finance Minister, I am extremely grateful that we have been able to tap on the deep financial reserves – our current and past reserves which have been so carefully built up, invested and managed,” he said.
“This has allowed us to respond to the crisis without having to borrow, and therefore burdening our future generations with repayment obligations.”
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Responding to Workers’ Party secretary-general Pritam Singh - whom he noted had asked “time and again” on the size of Singapore’s reserves - Mr Heng said the country’s reserves comprised assets invested by the Monetary Authority of Singapore (MAS), GIC and Temasek.
Of these, both MAS and Temasek make public the size of funds invested, with only the size of the funds invested by GIC not published, Mr Heng added.
The Deputy Prime Minister said the total size of Singapore’s reserves are not disclosed for the sake of its national security and strategic interests.
“As a small country without any natural resources and highly dependent on imports, our reserves are vital to our overall economic and financial stability,” he said.
He added that the reserves are a “key defence for Singapore in times of crisis”, noting that during the 2008 financial crisis, former President SR Nathan’s approval of the provision of S$150 billion to guarantee bank deposits- as well as S$4.9 billion for a package to support businesses and workers - helped the country to overcome the crisis then.
The reserves serve as a strategic defence, which allow the country to “resolutely defend” the Singapore Dollar against speculative attacks, said Mr Heng, noting this contributes to a stable Singapore dollar, which bolsters the confidence of both investors and citizens.
“Our reserves are thus no different from SAF's (Singapore Armed Forces) arsenal. No country’s armed forces will ever tell you exactly how much ammunition and weaponry they really have,” he added.
“To do so is to betray valuable intelligence to potential adversaries. This is obviously not a wise defence strategy, and likewise should not be adopted for our financial reserves.”
Members of Parliament should debate on the merits of policies and programmes, especially those which require the use of reserves, said Mr Heng.
“But let’s be clear - it is neither in the interest of Singapore, or Singaporeans to repeatedly ask about the size of our reserves,” he said.
“We are in the middle of a storm, and I am disappointed that Mr Pritam Singh has used this occasion to raise this question again.”
The Aljunied GRC MP however responded that the opposition also acts as a steward of the country’s reserves, as well as the Government’s expenditure priorities.
“Because when the Government introduces policies where the reserves have to be employed, the question we have to ask ourselves is, is it enough? Or is it too much?” said Mr Singh.
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Mr Heng replied that the checks and balances in the system had been “rigorously designed and very well-observed”.
“And I can tell you that even in presenting this budget we are asking for (from) the President and the Council of Presidential Advisers, I spent a lot of time explaining the details,” he said, adding that Madam Halimah and the Council asked “very, very good questions”.
Although many had over the years urged the Government to spend more out of Singapore’s reserves to fund the country’s growing expenditure, Mr Heng said the authorities do not see the reserves as a “piggy bank to be broken at will, to provide the Government with a convenient source of additional revenue”.
The country has avoided running deficits in good years, and consistently saved, he noted.
“If we had succumbed to the political pressure to spend more of our reserves in good years, we would not have had the war chest to deal with critical moments, such as now. And to do even more, if necessary, even in the next term of Government,” said Mr Heng.
The Deputy Prime Minister noted however that the aftermath of the COVID-19 pandemic may last for a long time, requiring the country to deal with it sustainably.
He warned that if the crisis deepened, both the economy and government revenues would shrink, requiring that the country to dip into its reserves again for a recovery.
"While we must make plans - and we are, at this hour - let us focus our minds fully on making the best use of this very unprecedented Budget, to build social and economic resilience," said Mr Heng.
"And if there is a need, we have the institution of the Government and the elected President, to decide on how best to use our resources to manage a crisis."