The economy in the future will be more volatile.
Because of this, it is key that Singaporeans adopt a mindset that the country has to prepare for contingencies, "the one big unknown", when planning the use of its reserves, rather than focus on how much can be spent from the money accumulated over the years, said Deputy Prime Minister Heng Swee Keat yesterday.
Saying that he asked himself all the time what future contingencies there could be that would require the use of the reserves, Mr Heng noted that in past years, Singapore has already had to confront the Asian financial crisis, the severe acute respiratory syndrome (Sars) outbreak and the global financial crisis. The current Covid-19 crisis remains far from over and, in fact, is becoming more serious, he said in the debate on the President's Address.
Responding to an exchange between Prime Minister Lee Hsien Loong and Workers' Party chief Pritam Singh on the role of the reserves in funding social spending, he said: "I think we must expect that panics and crashes will continue to happen in the global economy."
As an open economy, Singapore will be far more exposed than many other economies.
Mr Heng, who is also Coordinating Minister for Economic Policies and Finance Minister, urged Mr Singh to bear in mind the fact that as a country with no natural resources of any kind, which has to "really live by our wits", having reserves as a contingency fund gives Singapore strength and allows it to keep jobs, restructure and reform.
Even in this crisis, the Government was able to come up with proposals on looking beyond Covid-19, due to the attitude that Singapore has held towards the management of its reserves. "We owe something not just to ourselves but to our future generations," said Mr Heng.
The Deputy Prime Minister also took Mr Singh up on his point on how the role of the reserves can be re-examined to address questions of inter-generational equity.
The Leader of the Opposition had said the Workers' Party's intention was not to raid the national coffers that have been built up over the years, but to examine the extent to which the growth rate of the reserves can be slowed to help fund social needs, without touching the principal amount.
Mr Heng said many countries fund social programmes. "Somebody has to pay for those borrowings. Who? Future generations. The massive debt that has been incurred will have to be paid for by future generations."
As Finance Minister, he said, he felt grateful to Singapore's founders for leaving Singaporeans with the current reserves, which he had to tap - only after "very, very tough questions" from the President and the Council of Presidential Advisers - to manage the Covid-19 situation.
"With these reserves... my team and I were able to focus fully on what would best serve the interests of Singaporeans, how would we best help our businesses, how would we best provide resources for the front-line agencies, especially the Ministry of Health, to tackle this major crisis.
"I didn't have to worry about what terms would I have to negotiate with lenders and how we are going to pay for it," said Mr Heng.