SINGAPORE - An increase in the cap set on government borrowing via Treasury bills and government securities was approved by Parliament on Tuesday (Jan 5).

This will cater to the expected growth in demand for these debt instruments over the next five years.

The increase raises the borrowing limit for Treasury bills by $45 billion to $105 billion and for government securities by $270 billion to $960 billion.

Speaking during a motion to seek approval for the changes on Tuesday, Second Minister for Finance Lawrence Wong stressed that the borrowings are invested and do not increase the amount available for government spending.

Under the Government Securities Act, Singapore Government Securities can be issued to develop the domestic debt market.

It also authorises the issuance of Special Singapore Government Securities, which are bonds issued to the Central Provident Fund (CPF). The bonds issued in this case are to pay the CPF interest rates that CPF members get on their savings.

Treasury bills, under the Local Treasury Bills Act, are also issued to develop the domestic short-term debt market and to meet market demand for short-term rated Singapore government debt securities.

Borrowing caps for government securities and Treasury bills were last raised in 2016 and 2007 respectively. Since then, the Government has fully utilised the prevailing limit on the issuance of Treasury bills. The prevailing limit on government securities will also be reached before the middle of this year, noted Mr Wong.

The majority of the projected increase in government securities by the end of 2025 is expected to be issued to the CPF to meet investment needs, said Mr Wong.

"We expect CPF balances to increase due to growth in the resident labour force and wages," he said.

The Government will also put in place a new short-term cash management tool, where Treasury bills can be issued on an ad-hoc basis to meet temporary cashflow mismatches, said Mr Wong.