Budget 2019 debate

Reserves a strategic defence, says minister

Singapore's reserves comprise assets invested by the Monetary Authority of Singapore, GIC and Temasek.
Singapore's reserves comprise assets invested by the Monetary Authority of Singapore, GIC and Temasek.ST FILE PHOTO

They help S'pore to weather crises, give Govt confidence to plan for the long term

Singapore's reserves are a strategic asset, allowing the country to tide over a crisis without being reliant on others, Finance Minister Heng Swee Keat said yesterday.

They also serve as a "strategic defence, to deter parties who wish to undermine the interests of Singapore and Singaporeans", he added.

"Such moves go beyond currency speculation attacks to other types of threats," Mr Heng told Parliament in a speech rounding up debate on this year's Budget.

The minister said: "Our reserves, like our investments in defence and security, give us the confidence to plan long term, knowing that we will have the ability to take care of our people and defend our sovereignty."

He outlined the need to be disciplined in managing the reserves. Under the current Net Investment Returns (NIR) framework, the Government taps up to 50 per cent of the expected long-term real returns for spending and ploughs back at least 50 per cent to grow the pot and generate more returns.

This ensures that both current and future generations benefit from the reserves, Mr Heng said.

The NIR contribution is today the single largest contributor of revenues, larger than any category of taxes collected. "If we did not have the NIR framework, we would have had to double our personal income tax collection or our GST collection to raise the same amount of revenues," he added.


Addressing Workers' Party chief Pritam Singh (Aljunied GRC), who sought more data on the reserves so people can better understand Budget policy trade-offs, Mr Heng said Mr Singh is "misinformed".

Mr Heng explained that Singapore's reserves comprise assets invested by the Monetary Authority of Singapore (MAS), GIC and Temasek. The size of MAS' and Temasek's assets is public information, but the GIC portion is not disclosed. This is because doing so would reveal the complete picture of Singapore's financial reserves, Mr Heng said.

As of March 31 last year, the official foreign reserves managed by MAS stood at $377 billion and the size of Temasek's portfolio was $308 billion, according to the Finance Ministry's website.

While the size of the Government's funds managed by GIC is not published, it has been revealed that GIC "manages well over US$100 billion (S$135 billion)", the ministry noted.

Mr Heng said: "We should not underestimate the need for a rainy day fund. Singapore faces particular vulnerabilities, given our lack of natural resources. With an economy worth nearly $500 billion a year, we should set aside enough to protect it and our people's livelihoods and future."

Citing how the reserves played a key role in Singapore weathering the 2008 global financial crisis, he said: "Let us not squander this strategic advantage that we have."

A version of this article appeared in the print edition of The Straits Times on March 01, 2019, with the headline 'Reserves a strategic defence, says minister'. Print Edition | Subscribe