PRESIDENT S R Nathan revealed yesterday why he agreed to the first-ever draw on past reserves, citing the severity of the downturn and the speed at which the economy was declining.

It took 11 days for the Government to seek and secure his in-principle approval, with Mr Nathan giving the nod just a day before the Budget was presented in Parliament on Jan 22.

On what PM Lee Hsien Loong told him about the state of the economy 'He touched on the dire economic circumstances, he shared his concerns...He also pointed out...the need to go for extraordinary measures to give confidence locally, and to address the impact it would have on our people, particularly the low-income.' ... more

The swiftness of the process, he said, stemmed from the urgency in giving the Government the confidence to roll out measures to tackle the recession which could worsen without fast action.

'I recognised the importance of giving confidence to go ahead with the measures proposed in the Budget for the particular reference to past reserves bearing in mind (that) if the situation prolongs or worsens, negative consequences would have kicked in, making any measures too late to be of any effect,' he told the Singapore media at the Istana.

He was making public for the first time his decision to allow the drawing down of $4.9 billion of past reserves to fund two schemes: a Jobs Credit scheme to subsidise wage costs in a bid to save jobs; and a Special Risk Sharing Initiative to give companies more access to credit.

Explaining the speed with which the decision was made, he said: 'The urgency was quite evident, and I think 11 days was reasonable. If it had to be, it could have been shorter.'

Mr Nathan also said in response to questions that he need not have held a press conference to explain the decision. He is required only to convey his decision in writing to Parliament in response to the Government's request.

But there was interest during the Budget debate about the process of dealing with past reserves, and questions of when past reserves can be used, he noted.

He made it clear that the steps taken to seek his approval did not bypass procedures and went by the book.

'Whether you take 11 days or one month, the process will be the same,' he noted. 'If we had the luxury of time, we'd have taken much longer. But the circumstances were such, people's confidence had to be restored.'

Under the Constitution, Singapore's national reserves can only be used if two parties give consent: the Government of the day, and the Elected President.

Mr Nathan sought to dispel any impression of a hurried and easy passage to the unlocking of the reserves - a response to views expressed by some MPs in the Budget debate, and among some Singaporeans in public and online forums.

They wanted more information made available about the process, and how and why the President reached his decision.

Noting such calls, Mr Nathan dwelt at length on what happened in those 11 days during his 40-minute press conference in the Istana's Reception Room.

He also disclosed that he and his Council of Presidential Advisers (CPA) had, in fact, sought regular briefings last year on the state of the global economy and its possible impact on Singapore.

And he revealed that Prime Minister Lee Hsien Loong also discussed his concerns about the dire economic circumstances and the need 'for extraordinary measures to give confidence locally, and to address the impact it would have on our people, particularly the low-income'.

He did not say when that meeting took place, but PM Lee spoke of the need to seek his permission and approval to use past reserves, specifically for Jobs Credit and the Special Risk Sharing Initiative.

'The CPA and myself were already aware of the circumstances that was prevailing and how it was impacting on us.

'So I agreed at that stage to give every consideration to the proposal when it was submitted to me.'

After contacts between government officials and his office around Jan 9, Mr Nathan and the CPA were briefed by ministry officials, and Trade and Industry Minister Lim Hng Kiang on the state of the economy, and Finance Minister Tharman Shanmugaratnam on the Budget strategy.

Mr Nathan left CPA members to come to a decision on their own, but revealed that he was convinced by then of the need to agree to the request.

Mr Tharman sent a formal proposal in a Jan 19 letter, which his office received a day later. CPA members also unanimously recommended that Mr Nathan give his in-principle approval.

He did so on Jan 21. With the Budget passed on Feb 13, what remains is for his formal approval to be given to Parliament. He will do so when he receives a formal request to approve the Budget, including the draw on reserves.

sueann@sph.com.sg