Since 2018, the Government has been exploring the option of borrowing to fund large long-term infrastructure projects. It has now proposed a Significant Infrastructure Government Loan Act (Singa) which sets out the framework for such borrowing. This is a timely initiative and a necessary departure from the past practice of funding infrastructure development from recurrent revenues for at least three reasons.
First, with interest rates at close to historic lows, and given Singapore's AAA rating, this is an opportune time for the Government to borrow at favourable rates. Second, infrastructure spending needs are likely to grow over the coming decade, particularly with the expansion of the rail network, expenditure on climate change adaptation, other green projects and major highways. With social spending also likely to rise, all infrastructure spending cannot be funded solely from recurrent revenues without significant tax increases - unlike in the 1990s, which were mostly high-growth years and social spending needs were not as pressing as they are now.