By S Ramesh
SINGAPORE: Members of Parliament have lauded the government’s decision to use past reserves to finance two schemes to fight the current economic crisis.
MPs, speaking on Day One of the Budget debate in Parliament on Tuesday, however, cautioned against setting a precedence.
The general consensus of MPs who supported the government’s decision to dip into the reserves for S$4.9 billion to defend the economy is that it is an extraordinary measure for extraordinary times.
“Had we depleted our reserves in early years, today we would be losing hope and hope is something Singaporeans cannot afford to lose,” said Mr Inderjit Singh, who is the chairman of the Government Parliamentary Committee (GPC) for Finance and Trade and Industry and an MP for Ang Mo Kio GRC.
Zainul Abidin Rasheed, Senior Minister of State for Foreign Affairs and MP for Aljunied GRC, said: “It must be that bad for the normally tight-fisted and prudent Singapore government to release its hold on our national reserves, a sacred cow held dearly and closely to our hearts.”
Halimah Yacob, MP for Jurong GRC, said: “I support the use of our past reserves as I think that the situation we are in is truly exceptional and nothing like what we have seen in past recessions. We should not wait until companies are flat on their backs or Singaporeans are truly suffering before we consider it prudent to use our past reserves.”
MPs also asked what constituted the exceptional circumstances for the government to resort to such a move.
Halimah Yacob said: “Where is the threshold point when we start dipping into our reserves. Some have also raised the question whether there is really a need to dip into our past reserves, considering that we have enough surpluses to pay for the S$4.9 billion needed to fund the Jobs Credit and the Special Risk-Sharing Initiative for Bank Lending.”
Others wanted more information on the process adopted before the President gave his approval.
Opposition MP Low Thia Khiang said: “Past reserves are supposed to be protected by a two-key system. The government holds one key, while the President holds the second key. But the speed at which the two-key system can unlock the reserves is too fast for comfort.
“I want to know when was the request for the S$4.9 billion made? How long did it take the President to give the in-principle approval? Does the President or the Council of Presidential Advisors know for certain what the government intends to do with its substantial current reserves before allowing it to draw down on past reserves. Can a pre-emptive spending rationale be a compelling reason for the President to unlock the reserves?”
Nominated MP Siew Kum Hong said: “There has been precious little information about the deliberations of the President or of the Council of Presidential Advisers in giving in-principle approval to use the reserves. The government should ask the President and the Council to publish detailed reasons for their decisions. This is the first time we are using the reserves. It is therefore a golden opportunity to set the principles for doing so.”
For the longer term, the concern is to ensure the country’s reserves continue to grow.
Lim Wee Kiak, MP for Sembawang GRC, said: “Our reserves and investments must have also taken a hit and decreased just like all asset classes in the global market. How much of our reserves is left after the spending on these two programmes? Can the Finance Minister assure the House that our goose that lays golden eggs year after year will continue to do so after this withdrawal and after this financial shock?”
Tampines GRC MP Irene Ng asked: “Can I ask the finance minister for an estimate of how long would it take for the government to reinstate this projected S$4.9 billion drawdown from the reserves? Or are we quite comfortable at the rate that the reserves have been accumulating over the years, providing more than enough for any life-and-death contingency?”
This is the first time the Singapore government has dipped into the reserves.
And MPs who spoke on the subject are clear about their stand – that such a decision must not be made a habit and it is important for Singaporeans to understand the full reasons behind it and the President’s approval.
Singaporeans will surely hear more of this as Parliament debates the subject over the next few days.