Bonds, reserves could be used to fund climate battle

In the short-term, funding for projects such as a $400 million upgrade to the country's drainage systems to boost flood resilience will come from ministry-level expenditures.
In the short-term, funding for projects such as a $400 million upgrade to the country's drainage systems to boost flood resilience will come from ministry-level expenditures.PHOTO: LIANHE WANBAO

The issuance of government bonds to fund the $100 billion it could take to fight rising sea levels over the next century is one option that Singapore is mulling over, according to a Bloomberg report.

Minister for the Environment and Water Resources Masagos Zulkifli said in an interview yesterday that in the short term, funding for projects such as a $400 million upgrade to the city-state's drain-age systems to boost flood resilience will come from ministry-level expenditures.

Longer-term spending, he said, could require the Government to tap its national reserves and issue state bonds.

"For those that have to be spent that will benefit future generations, we are talking about borrowing so that whatever we spend for the future will also be paid for by the future generations," Mr Masagos told Bloomberg TV.

"$100 billion is actually a lot of money even if spent over 100 years," he added.

He announced last month that Singapore is fortifying its defences against climate change, with $400 million being pumped into upgrading and maintaining its drains over the next two years and $10 million more channelled to studying sea-level rise. It has spent around $1.8 billion in drainage improvement works since 2011.

Climate change was also a key topic of Prime Minister Lee Hsien Loong's National Day Rally speech, where he spoke of the need to build coastal defences.

 
 
 
 

There are good engineering solutions, he said, estimating that it will cost "probably $100 billion over 100 years, quite possibly more" to protect against rising sea levels.

"Because this is a 50-to 100-year problem, we can implement a 50-to 100-year solution to this problem," PM Lee had said.

Deputy Prime Minister and Finance Minister Heng Swee Keat had, in his Budget speech in February, noted that it is challenging to predict the exact timing and needs of items like infrastructure to protect against climate change.

Paying for them through some borrowing is fairer and more efficient, he added, noting that the benefits span many generations.

"Borrowing, done in a responsible and sustainable manner, will help instil financial discipline and distribute the share of funding more equitably across current and future generations," Mr Heng had said.

A version of this article appeared in the print edition of The Straits Times on August 22, 2019, with the headline 'Bonds, reserves could be used to fund climate battle'. Print Edition | Subscribe