Prime Minister Lee Hsien Loong emphasizes the importance of safeguarding Singapore’s reserves for future generations, advocating for responsible fiscal policies during the debate on public finances on February 7, 2024.
During the parliamentary debate on the Motion on Public Finances on February 7, 2024, Prime Minister Lee Hsien Loong firmly supported the amendments proposed by Mr. Liang Eng Hwa, focusing on the prudent management of Singapore’s past reserves. PM Lee reminded the assembly of Singapore’s fiscal journey, highlighting the nation’s transformation from a state with bare financial coffers in 1959 to a country with significant reserves, thanks to the foresight and austerity of its founding leaders.
PM Lee recounted the historical context leading to the establishment of the reserves protection system, including the introduction of the Elected Presidency and the Second Key concept to safeguard against unwarranted expenditure. He detailed the evolution of reserve management policies, such as the Net Investment Returns (NIR) framework, which balances current needs with future sustainability by allowing the government to spend half of the long-term expected real returns.
The Prime Minister emphasized the critical role of the reserves during crises, citing their utilization during the Global Financial Crisis and the COVID-19 pandemic. These instances showcased the reserves as a strategic asset, enabling Singapore to respond robustly without accruing significant debt. PM Lee argued against the notion of a fixed “enough” amount in reserves, stressing the unpredictability of future needs and the importance of maintaining a reserve growth rate in line with the economy.
Addressing calls for increased reserve spending, PM Lee cautioned against undermining the principles that have ensured Singapore’s financial stability and independence. He underscored the ethical obligation to future generations and the significance of the reserves as a collective patrimony. The PM invited opposition parties advocating for policy changes affecting the reserves to seek a mandate from the electorate, reiterating the People’s Action Party’s (PAP) commitment to responsible governance.
Source – PMO
