The Ministry of Finance (MOF) will make a case to seek for the President’s approval of tapping on the national reserves to deal with the Covid-19 situation if it continues to worsen, said Deputy Prime Minister and Finance Minister Heng Swee Keat during his wrap-up Budget speech in Parliament earlier today (28 Feb).
“The President plays a critical role in guarding against profligate spending, and to ensure proper use of our past reserves to safeguard Singapore’s interest when needed,” he said in his speech.
Addressing concerns raised over the national reserves on whether it would be used for the country’s needs, Mr Heng stressed the importance of control in the use of national reserves as he described the reserves as Singapore’s “nest egg” which is borne of hard work and discipline by the country’s preceding generations.
“Now, we can do the easy thing and avoid the pain for ourselves today. We can decide not to raise GST to pay for our own spending, but to tap on our reserves and its investment returns instead,” he noted.
He went on to say, “But by doing so, we will soon deprive future generations of the benefits that we enjoy today. What would that, then, say about us?”
Meanwhile, in Parliament yesterday (27 Feb), Workers’ Party Non-Constituency Member of Parliament Leon Perera posed a question on whether the government will release more funds from the national reserves to invest in citizens and companies.
In response to Mr Perera’s question, Mr Heng noted that the taxes remain low because the national reserves have generated substantial returns, which in return, places Singapore in a “highly unusual and very fortunate position”.
Mr Heng also pointed out that the Net Investment Returns Contribution (NIRC) contribute S$17 billion, or 3.3 per cent of the nation’s gross domestic product (GDP), which is the largest single contributor to the Budget for the financial year 2019.
He said, “Today, the NIRC at S$17 billion is more than personal income tax collections at S$12 billion, and GST collections at S$11 billion. If we did not have the NIRC, even doubling personal income tax, or doubling the GST rate to 14 per cent, would still not be enough.”
“Tell me in which other country are citizens able to reap the benefits of past savings in this way?” he added.
Noting the efforts of former president in managing the national reserves, he said that the national reserves help the country to deal with global swings, therefore the government has a robust set of rules to safeguard and manage the use of the reserves.
“So let us never forget that what we have inherited is very unusual and very precious. Let us be responsible and steward these properly for our future generations,” Mr Heng concluded.