PM Lee urges against spending reserves, says they should be considered ‘rainy day money’

SINGAPORE: Just two days after the head of DBS Bank suggested that Singapore can reimagine what can be done with its sizable reserves, including more social welfare spending and/or investing in the region, Prime Minister Lee Hsien Loong issued a word of caution about spending those very same reserves.

“Singapore Reserves Revealed – PM Lee Reveals The Inside Story Of The Reserves,” a video series on CNA, was launched on Wednesday (Aug 16).

While affirming that the country has sufficient reserves “for most circumstances,” the Prime Minister added that to think that this will always be the case is the “biggest misconception,” as spending needs are already growing faster than the growth of revenues.

He, therefore, wants to ensure that Singapore’s reserves continue to be built up for as long as possible.

“I’m anxious that we keep it like this for as long as we can. Because it’s one of those things – once it’s gone, it will never come back again,” he told CNA.

“One day, if we have a rogue government” that would result from a “freak election” that “put the wrong team in charge”, all the reserves could be gone within one term, he quoted founding Prime Minister Lee Kuan Yew as having said in the National Day Rally of 1984.

And as the exact amount of reserves is not revealed to protect national interests, he assured that the reserves are “enough to give us a substantial support in the Budget every year contributing to the government’s revenues.”

Prior to the last global financial crisis, the government didn’t think it needed additional support but ended up needing “S$4, S$5 billion.”

And again, when the Covid-19 pandemic struck, “in the end we needed S$40 plus billion. So you have no idea how much you will need.”

He underlined, however, that the pandemic was “far from the worst thing that can happen,” urging that the more productive way to think of the reserves is to consider it “rainy day money”.

“If it’s not raining, I don’t touch it. If it’s a sunny day and I can afford to, I put a little bit more into it,” he added. “However much there is, I keep on having this attitude that I would like to build it up a little bit more when I can so that the next generation will be in a more secure position than I am today.” /TISG

DBS head says Singapore hasn’t realized that it’s rich, suggests rethinking what to do with reserves