New Bill to merge existing legislation on government borrowings for non-spending purposes

SINGAPORE: A new Bill was introduced in Parliament on Monday (Oct 4) to consolidate legislation on government borrowings for investment and market development.

Tabled for its first reading in Parliament by Finance Minister Lawrence Wong, the Government Borrowing (Miscellaneous Amendments) Bill seeks to merge the Local Treasury Bills Act (LTBA) into the Government Securities Act (GSA).

The changes introduced through the Bill are “administrative in nature with no change to the substance of the individual Acts”, said the Ministry of Finance (MOF) in a fact sheet.

The consolidation is proposed so as to “clearly separate” existing borrowings for non-spending purposes from the new borrowings made for the financing of major and long-term infrastructure projects under the recently introduced Significant Infrastructure Government Loan Act (SINGA).

Passed by Parliament in May, the SINGA allows the Government to borrow up to S$90 billion for “nationally significant infrastructure”, such as new MRT lines.

The MOF, in its fact sheet issued on Monday, described the LTBA and GSA as the main Acts governing the Government’s borrowing activities.

The former was enacted in 1923 and authorises the issuance of Treasury Bills to develop the domestic short-term debt market. 

The latter was enacted in 1992 and authorises the issuance of Government Securities, such as the Singapore Government Securities, to develop the debt market and meet the investment needs of the Central Provident Fund.

The LTBA and GSA provide for separate borrowing limits of S$105 billion for Treasury Bills and S$960 billion for Government securities, respectively.

These borrowings under the LTBA and GSA are not available for spending, the MOF said.

KEY FEATURES OF THE BILL

Under the Bill, the LTBA will be merged into the GSA.

This will then be renamed as the Government Securities (Debt Market and Investment) Act to “emphasise that borrowing proceeds are not for spending”, MOF said.

The current borrowing limits under the LTBA and GSA will also be combined to form a single borrowing limit of S$1,065 billion – no change to the existing overall borrowing limit.

“Outstanding securities issued under the existing GSA and LTBA will automatically be subsumed under the renamed Government Securities (Debt Market and Investment) Act and there will be no impact on the existing features of the securities,” the ministry said.

In addition, borrowing provisions in other legislation will be repealed as they "are no longer necessary".

This refers to the External Loans Act and Treasury Deposit Receipts Act, as well as borrowing provisions in the Development Investment Fund Act.

MOF said there are presently no outstanding loans under these Acts, and the Government "does not foresee the need to borrow under these Acts for spending, investment or market development".

“Going forward, the Government will rely on the renamed Government Securities (Debt Market and Investment) Act to borrow for non-spending purposes, and SINGA to borrow for spending on major, long-term infrastructure,” the Finance Ministry added.

“Borrowings for non-spending purposes will continue to make up the majority of government borrowings. Singapore does not have any net debt as our assets are well in excess of our liabilities.”

Meanwhile, the Bill will result in “consequential amendments” to the Constitution so as to rename existing references to the LTBA and GSA, and remove a reference to the repealed External Loans Act.

The amendments will be made through the Constitution of the Republic of Singapore (Amendment) Bill, which was introduced by the Ministry of Law at the same parliamentary sitting on Monday.