HELP’S AT HAND: TO COUNTER THE CRISIS

Singapore Budget 2020: President Halimah Yacob concurs with rates of return on reserves

President Halimah Yacob has concurred with the rates to be used in determining how much of the nation's past reserves can be used under the Net Investment Returns framework. ST PHOTO: KELVIN CHNG

President Halimah Yacob has concurred with the rates to be used in determining how much of the nation's past reserves can be used under the Net Investment Returns framework, she said yesterday.

"As in the past, the Net Investment Returns Contribution forms a significant component of our Budget," she wrote in a Facebook post. "Our strong fiscal position has enabled us to respond strongly to challenges in the past, and will continue to do so in the current Covid-19 outbreak."

In December, Deputy Prime Minister Heng Swee Keat and officials from the Finance Ministry briefed the President on the Government's proposed expected long-term real returns on its assets.

The meeting is part of each year's Budget cycle, with the projections used to determine how much of the nation's past reserves can be tapped for the next Budget.

Under the Net Investment Returns framework, the Government is allowed to take into the Budget up to 50 per cent of the expected long-term real returns on net assets invested by GIC, the Monetary Authority of Singapore and Temasek, after deducting liabilities such as government bonds.

In her post, Madam Halimah noted that DPM Heng has assured her that Budget 2020 does not require a draw on past reserves, a point Mr Heng made in his speech.

The President's role includes protecting the past reserves, which Madam Halimah noted have "kept our economy stable during periods of crises".

She also said each year's Budget needs to strike a balance between Singapore's long-term needs and its immediate priorities.

"Our immediate and pressing needs are to support industries, workers and families affected by disruptions brought about by the current Covid-19 outbreak."

This includes helping companies keep their workers and cushioning the impact of higher living costs for families, she added.

"At the same time, we cannot lose sight of our future needs. Rapid technological changes, climate change and an ageing population, not to mention the increasing restrictions on global trade, require new thinking and measures so that we can continue to grow."

Hence, economic restructuring remains a core priority, she said.

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A version of this article appeared in the print edition of The Straits Times on February 19, 2020, with the headline President Halimah Yacob concurs with rates of return on reserves. Subscribe