If the Government runs balanced budgets or has budget surpluses in some years, why do we still need to borrow money?
The Singapore Government does not borrow for recurrent spending needs. Instead, the Government issues debt to meet specific long-term objectives:
Objective of issuing debt | Description | Examples |
|---|---|---|
To facilitate debt market development and other non-spending purposes | Borrowings issued under the Government Securities (Debt Market and Investment) Act 1992.
The proceeds from such borrowings are invested as part of our reserves and cannot be spent. | Publicly Held• Singapore Government Securities (SGS) (Market Development) and Treasury Bills (T-Bills) help to develop the domestic debt market by providing a robust yield curve for the pricing of private debt securities. • Singapore Savings Bonds (SSB) provide a long-term savings option to individual investors.
Non-Publicly Held• Special Singapore Government Securities (SSGS) primarily issued to meet the investment needs of the Central Provident Fund (CPF). Singaporeans’ CPF monies are invested in these securities which are fully guaranteed by the Government. The securities earn for the CPF Board a coupon rate that is pegged to CPF interest rates that members receive. • Reserves Management Government Securities (RMGS) facilitate transfers of Official Foreign Reserves (OFR) above what the Monetary Authority of Singapore (MAS) requires to the Government for longer-term investment. |
To finance nationally significant infrastructure | Borrowings issued under the Significant Infrastructure Government Loan Act (SINGA).
Such borrowings are raised within the legislative safeguards that include a gross borrowing limit, and the proceeds can only be spent on qualifying nationally significant infrastructure projects. | • SGS (Infrastructure) are issued to finance spending on nationally significant infrastructure, and to spread the costs of nationally significant infrastructure across multiple generation of users.
• Green SGS (Infrastructure) are a sub-category of SGS (Infrastructure). These are Singapore sovereign green bonds that finance qualifying green infrastructure under the Singapore Green Bond Framework. |
Read more information on Government borrowings.
Related questions
Singapore has high levels of Government debt as reported in the CIA Public Debt Factbook. Do we have enough assets to cover our liabilities?
Is the Government borrowing too much? Isn't Singapores debt-to-GDP ratio already very high?
Why dont we borrow instead?
Why is there a need for the government to issue Reserves Management Government Securities (RMGS)?
