Is MAS financing government expenditure by subscribing for Reserves Management Government Securities (RMGS)?

No, MAS is not financing Government expenditure by subscribing for RMGS.

There are strong legislative safeguards to ensure that the proceeds from RMGS are not spent. Under the Government Securities Act (GSA):

• The proceeds from RMGS are accounted for in the Government Securities Fund (GSF).

• The GSF can only be used for investments or to pay for expenses related to the investment and management of the GSF or the issuance and redemption of Government securities and T-Bills.

• The GSF cannot be used to fund Government fiscal needs.
  
  

In addition, the proposed MAS Act amendments will further ensure that any subscription of RMGS by MAS can only be made to facilitate transfers of OFR not needed by MAS to the Government.

MAS will use only foreign assets to subscribe for RMGS, rather than Singapore Dollars, which is the predominant currency in which the Government spends. This is to draw a clear and direct link between MAS RMGS subscription and the transfer of OFR not needed by MAS to the Government.