"I am confident that when the time comes for me to hand over to a new prime minister, Singapore will be in the hands of good stewards," Prime Minister Lee Hsien Loong told Parliament in May 2018.

It was during the debate on the President's Speech when he spoke about what it meant to him to be a steward of Singapore and about his work to prepare the 4G ministerial team to succeed him.

He said,

"The government is certainly not the owner of Singapore, but neither is it just the manager of Singapore.

It is the steward, it’s responsible for taking good care of the country, for holding it in trust, building it up and handing it on in due time to future generations.

The government must keep faith with the past generations who gifted this country to us. It has to be responsible to the present generation who continue to build on what we have inherited.

But above all, it must consider future generations, whose lives and whose futures depend on us, the present generation.

Depend on us thinking of their interests, acting on their behalf, making wise and far-sighted decisions to cause Singapore to endure and flourish for many more years."

Fast-forward six years from then, and PM Lee has seen out a 20-year term in the country's top job, with Deputy Prime Minister Lawrence Wong to take over from him on May 15, 2024.

So, how will Singaporeans remember PM Lee as a steward?

One key event that comes to mind is when he guided Singapore through what was hailed as its "worst recession" in the aftermath of the global financial crisis in 2008 and 2009.

Another would be PM Lee's steady leadership during the Covid-19 pandemic and how he rallied citizens through what was termed "the crisis of a generation".

2008 global financial crisis — S'pore's "worst recession"

PM Lee was Singapore's first prime minister to tap into the reserves in the aftermath of the 2008 global financial crisis.

After the collapse of the US investment bank Lehman Brothers in 2008 triggered a sharp slowdown in global economic conditions, Singapore, an international financial centre, became one of the first Asian countries to fall into recession.

In response, PM Lee's government brought forward the 2009 Budget announcement and proposed an unprecedented S$20.5 billion aid package for Singaporeans to help economic recovery.

To fund this package, the Singapore government withdrew funds from the reserves for the first time — S$4.9 billion.

PM Lee went to see then-President S R Nathan, who had been following the situation closely and obtained his approval to use the reserves.

In the 2009 National Day Rally, PM Lee called the recession a "much worse storm than expected" but noted that "the eye of the storm has passed".

Despite the fear of mass layoffs, the unemployment rate stabilised and employment swiftly rebounded by the end of the year.

And of the amount drawn down from the reserves, S$4 billion was actually used, and it was fully returned by the government by the end of its term.

Covid-19 pandemic — "the crisis of a generation"

The next time PM Lee would tap into the reserves would be at the height of the Covid-19 pandemic, in 2020.

The unprecedented global crisis proved a far tougher challenge than the previous Severe Acute Respiratory Syndrome (SARS) epidemic that rocked Singapore in 2003, just before PM Lee took over as prime minister.

"We knew that this was a storm of the century, and we had no choice. We had to use the reserves. So, we went to [then-President Halimah Yacob], we made the case, and we did what we needed to do. And fortunately, we had the resources, so we could do it," PM Lee said in an interview.

During the pandemic, the government announced four successive financial relief packages for Singaporeans, drawing down a total of S$40 billion from the reserves to fund this.

PM Lee also delivered nine televised speeches to the nation to rally citizens during the crisis.

He later explained that tapping on the reserves gave the government the resources to acquire vaccines on a large scale, on top of providing job support and payouts for Singaporeans.

In the 2022 National Day Rally, PM Lee noted that the nation was "entering a new normal" but stressed that Covid-19 would not be the last crisis.

He said,

"With your support, we can turn hopes and dreams into reality, and united as one people, we can secure a brighter future in this uncertain world.

Not just for now, not just for ourselves, but for every Singaporean child, for many generations to come."

In 2023, the International Monetary Fund (IMF) assessed Singapore's "impressive" post-pandemic recovery was nearly complete and attributed it to:

"Strong economic fundamentals and the authorities’ decisive policy responses, including an unprecedented policy stimulus, supported a rapid recovery from the COVID-19 shock."

Importance of the reserves and role of the custodian

In both crises, Singapore's reserves played an important role.

Singapore uses a "two-key" system to protect our reserves — one held by the President and the other by the government.

In 1984, the year PM Lee first entered political office as a Member of Parliament (MP), the reserves totalled S$23 billion.

Then-PM Lee Kuan Yew expressed his concerns in a 1984 National Day Rally Speech that the reserves would be frittered away by a "profligate government".

As such, he mooted the idea of locking them up so they could only be drawn upon with the president's consent.

PM Lee once noted in Parliament that Lee Kuan Yew was criticised for trying an "impossible" task.

"Some of [Lee Kuan Yew’s] senior colleagues told him that in locking up the reserves, he was trying the impossible.

Trying the impossible – you know why?

Because their philosophy was: If a generation wants to spend the money, somehow they will get their hands on it, and they will do it.

[He] disagreed and decided he had to try his best."

PM Lee was later involved in designing the system to protect the reserves and worked under Former DPM S Jayakumar to refine the safeguards for the system.

One aspect of his work was defining the scope of Singapore's reserves.

In addition to foreign reserves held by the Monetary Authority of Singapore (MAS), financial assets belonging to "fifth schedule entities" such as Temasek Holdings, GIC, and CPF, as well as land assets under JTC and HDB, were included in the nation's reserves.

The role of the elected president as the second key to Singapore's reserves was also conceptualised in a White Paper in 1988.

It was put into effect following an amendment to the constitution in January 1991, with Singapore's fourth president, Wee Kim Wee — the first to hold such custodial powers.

Even more reforms

Other reforms to the system followed suit.

At first, it was only the capital sums in the reserves that were locked away, while the full amount of net investment income (NII) — the full amount of interest and dividends earned on investment — could be spent.

This changed after incoming president Ong Teng Cheong argued for some of the investment income to be set aside for the future, and a 50-50 split was agreed upon.

In 2001, Parliament passed a constitutional amendment to the effect, protecting 50 per cent of Net Investment Income (NII) while allowing the government of the day to spend the other 50 per cent.

As part of fine-tuning the system, PM Lee also studied how other institutions which had built up large endowment funds managed them.

He met up with Leonard Baker, who chaired the Yale Investment Committee, to understand how Yale did it, and modelled spending rules to fit Singapore's political and constitutional context.

This culminated in another amendment to the constitution in 2008, to introduce the Net Investment Returns (NIR) framework while keeping the 50 per cent rule.

The NIR component additionally allows the government to spend up to 50 per cent of the expected long-term real returns (including capital gains) from the net assets invested by investment entities.

The NII and NIR combined are called the Net Investment Returns Contribution (NIRC). It accounts for around 20 per cent of government revenue and 3.5 per cent of GDP.

“50 per cent for the present, 50 per cent for the future,” PM Lee explained in Parliament. “It is simple, it is intuitive, everybody can understand it.”

Challenged opposition on issue of spending reserves

While Singapore reserves are "safe" behind lock and key, it's not merely once or twice that people pushed for the government to spend it on the current generation rather than saving it for the future generation.

So when the opposition brought up the issue in parliament on Feb. 7, 2024, PM Lee challenged them.

He reminded people about how Singapore's reserves came to be and what it's meant for:

"We are not 'Ah Sia Kia' (Hokkien term describing descendants of rich families who do not contribute to their families' fortune).

We are responsible.

We are also forefathers, one day, of generations yet to be born."

When questioned on how much we have in our reserves and whether it would be "enough", PM Lee said that it was "the wrong question to ask" and a "misconception".

He explained that it is never the case when the reserves exceed a certain amount, and it would be "enough".

"There is no such number," he said. "We can have no idea what the future holds: what crises we will run into, how much we will need."

PM Lee also challenged the opposition to bring up spending reserves during the upcoming General Election (GE).

“Ultimately, in a democracy like Singapore, on big issues like this, it is the people who will decide,” PM Lee said.

"The PAP is convinced this is the right approach for Singapore. As long as the PAP government is in power, this is what we will do.

If any other political party thinks that this is not the right approach if they truly believe that we should dip into our reserves more — then bring it to the ballot box."

Put it up front. Say you want to touch, you want to spend, you want to shift the rules.

Don’t pretend that you’re just as prudent and only more kind-hearted.

Campaign in the next general election on this issue.

Ask voters for a mandate to form the Government, change the Constitution, dismantle the Second Key.

Put this squarely to the people and let them decide."

PM Lee added that he is confident that PAP will be able to convince Singaporeans, win the argument, and "do the right thing".

"Now I am preparing to hand over to my successor in good order. A Singapore, which is more prosperous and more secure.

I ask everyone to help them maintain the prudent policies that have served us well to keep Singapore on the right track so that we can all continue to benefit from the nation’s success for many years to come."

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Top image from MCI/Terence Tan & Unsplash