One important role of the Elected Presidency is to protect Singapore's past reserves.
Read: Here’s how Elected Presidency has evolved over the years to suit the wants of S’pore
So, now that President Halimah Yacob wields the responsibility to safeguard them, it's time to get acquainted with what exactly are our reserves.
What are the reserves?
The reserves are the Government's total assets (everything it owns) minus liabilities (the things that the Government has to spend on).
The things that the Government owns include physical assets (land and buildings) and financial assets (cash, securities and bonds) that belong to the Government, key Statutory Boards (CPF, HDB, JTC, MAS), and Government-linked companies (Temasek, GIC).
These key Statutory Boards and Government-linked companies are known collectively as Fifth Schedule entities, because they are listed in the Constitution under the Fifth Schedule.
Liabilities that the Government has to spend on include things like Singapore Government Securities and Special Singapore Government Securities.
Via picturesofmoney.org
According to the Ministry of Finance (MOF), as of March 2017, the Official Foreign Reserves managed by MAS was S$363 billion and the size of Temasek’s portfolio was S$275 billion.
The size of funds managed by GIC is not published, except that it manages well over US$100 billion.
Revealing the exact size of assets that GIC manages will, taken together with the published assets of MAS and Temasek, amount to publishing the full size of Singapore’s financial reserves.
It is not in our national interest to do so, as it will make it easier for markets to mount speculative attacks on the Singapore dollar during periods of vulnerability.
Further, our reserves are a strategic asset. They are a key defence for Singapore in times of crisis, and it will be unwise to reveal the full and exact resources at our disposal.
Why do we need reserves?
Reserves provide a stream of income for the Government Budget and provide a safeguard during times of need.
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How does the President protect the reserves?
The President approves the annual budget of the Government and Fifth Schedule entities, and ensures that they do not spend money from past reserves.
The President also approves the appointment of key appointment holders such as the Accountant-General, Auditor-General and Chief Valuer, and those in Fifth Schedule entities.
To do this, the President has access to information such as the size of the reserves (including a listing of physical assets like land) and the performance of the investment entities.
Have we drawn on our past reserves before?
Yes, we have. That was in January 2009, when the Government, with the approval of President S R Nathan, drew $4 billion from the past reserves to fund two schemes during the worst recession since Singapore's independence in 1965:
- Jobs Credit Scheme (which subsidised the employers' wage bills)
- Special Risk-Sharing Initiative (which gave companies access to credit).
The $4 billion was returned by the Government in 2011 after Singapore's economy recovered.
You can find out more about Singapore's reserves here.
Top image by picturesofmoney.org and Mothership.sg
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