Singapore—Workers’ Party MP Gerald Giam (Aljunied GRC) expressed his concerns in Parliament on Wednesday (Oct 14) over the “potentially large fiscal burden of returning $52 billion to the reserves” which would affect future generations of Singaporeans.
Mr Giam, who has a master’s degree in International Political Economy from Nanyang Technological University noted that the S$52 billion from the country’s reserves is the largest amount withdrawn to date and is “13 times what was drawn in 2009 during the Global Financial Crisis,” because of the unprecedented economic fallout of the Covid-19 pandemic.
He mentioned that Deputy Prime Minister Heng Swee Keat said in June that the Government is under no legal or constitutional obligation “to restore the draw from past reserves,” although it remains committed to rebuilding Singapore’s reserves.
The WP MP then asked DPM Heng to clarify whether or not the Government is planning on returning the amount, as well as if the returned funds will include interest.
Mr Giam’s concern also involves timing and the impact on the less fortunate, as committing to a short timeframe to return the S$52 billion “may subject our people to unnecessary levels of austerity and constrain the Government’s fiscal space.”
Such austere measures could cause the economy to contract, as well as “could slow economic growth and cause some painful cuts to public services, which might impact the poor.”
He asked Mr Heng, who is also Singapore’s Finance Minister, for an assurance that Singaporeans will not be subjected to a period of austerity imposed in the endeavour to return the funds to the reserves after the economic crisis is done. He also asked him to share “the broad timelines for this restoration,” if the Government’s commitment to return the reserves remains.
Mr Giam acknowledged that Mr Heng had already answered questions from MPs on the topic last June, but had not yet outlined the timeline for returning the reserves. Mr Heng had only said that this depends on the economy emerging stronger, which puts the country in a better position to build up resources.
The WP MP added that “a timeline of two years, 20 years or 30 years will make a huge difference in the provision required in the budgets of current and future governments. This will translate to vastly different levels of tax hikes and spending cuts required to meet these provisions.”
Noting how a timeline of two years would be impossible as this would necessitate setting aside $26 billion a year, he said that even a thirty-year timeline would require “a provision of $1.7 billion a year on average” which is “more than the combined FY2020 budget for the Prime Minister’s Office and the Ministry of Foreign Affairs.”
Additionally, should Singapore face more economic crises during this thirty-year period, there would be a need for more deficit spending, which would then affect the timeline as well.
The WP MP underlined the importance of “the Government to provide more clarity about its broad timelines,” as the budget impact of the provisions to return the S$52 billion to the reserves is significant, especially in that it would also affect future generations of Singaporeans. —/TISG