Deputy Prime Minister and Finance Minister Heng Swee Keat has said that the size of Singapore’s reserves is a matter of national security and cannot be disclosed, in case its economic and financial stability be threatened.
These funds serve as a “strategic defence”, protecting the Singapore dollar from any speculative attacks and boosting the confidence of investors and citizens.
Mr Heng was responding in Parliament on Tuesday (April 7) to questions on the reserves from Workers’ Party (WP) leader Pritam Singh.
Mr Heng compared the reserves to the Singapore Armed Forces’ arsenal, saying that no country’s armed forces would ever disclose how much ammunition and what weapons it had. To do so would provide valuable intelligence to potential adversaries and not be wise defence strategy. It was the same for Singapore’s financial reserves.
He cited how then-President S R Nathan agreed to the use of S$150 billion from past reserves to guarantee bank deposits during the financial crisis of 2008, which calmed depositors and prevented a run on banks.
As Singapore is a small country without any natural resources and highly dependent on imports, its reserves are vital to its overall economic and financial stability and its well-being, Mr Heng said.
The Deputy Prime Minister, referring to Mr Singh’s questions on the reserves, said it was neither in the interest of Singapore nor of Singaporeans to repeatedly ask about the size of the reserves. “We are in the middle of a storm, and I am very disappointed that Mr Pritam Singh has used this occasion to raise this question again.”
Singapore’s reserves consist of assets invested by the Monetary Authority of Singapore (MAS), Temasek Holdings and GIC. Unlike MAS and Temasek, GIC does not disclose the sum of the funds it invests.
According to latest figures, MAS has around S$396 billion in foreign assets and Temasek’s portfolio is valued at around S$313 billion.
Mr Singh said in response to Mr Heng that the WP was seeking figures on the reserves because when policies where reserves are being employed are introduced, it had to be asked if it was enough, too much or too little. He also asked if there was a more nuanced way to look at the numbers and have a more in-depth conversation about them.
Mr Heng said that the current system was meticulously designed and provided checks and balances. The President’s approval had to be given for any drawing of the reserves.
Mr Heng also said that the Covid-19 crisis had reaffirmed Singapore’s fiscal policy of spending prudently, investing wisely and setting aside money for the long term.
He said that he was extremely grateful that the country had been able to tap on the deep financial reserves that had been so carefully built up, invested and managed. He added that this had allowed the country to respond to the crisis without having to borrow, and without burdening future generations with repayment obligations.
So far, the Government had sought and obtained President Halimah Yacob’s in-principle support twice to draw up to S$21 billion from the reserves for Covid-19 support packages.
Mr Heng added that if the Covid-19 crisis deepened, the economy and government revenues would shrink and past reserves may have to be used again for a recovery.
The three support packages unveiled so far amount to S$59.9 billion, or about 12% of GDP. They are:
- S$6.4 billion Unity Budget in February.
- S$48.4 billion Resilience Budget in March.
- S$5.1 billion Solidarity Budget on Monday (April 6).
The spending in the 2020 financial year will be the largest in Singapore’s history and will see the country run a deficit of S$44.4 billion, its largest ever. /TISG