When has the President's approval been sought to draw on Past Reserves?
In October 2008, then-President S R Nathan gave his approval for a S$150 billion guarantee on all bank deposits in Singapore to be backed by Past Reserves. This was against the backdrop of the Global Financial Crisis where other jurisdictions were guaranteeing bank deposits as well. If Singapore had not provided a guarantee, we would have run the risk of funds flowing out of Singapore to other jurisdictions that had guarantees, even though our financial system was sound.
The guarantee lapsed on 31 December 2010, without being triggered. In this case, Past Reserves were not drawn on, although it could potentially have been.
In January 2009, the Government obtained then-President S R Nathans approval to draw down S$4.9 billion from the Past Reserves for the first time to fund special schemes in light of Singapores worst recession then since Independence.
The two measures were the Jobs Credit Scheme which subsidised employers' wage bills and the Special Risk-Sharing Initiative which helped viable companies gain access to credit. The actual amount drawn for these two measures was S$4.0 billion, less than expected. This was the first time that Past Reserves were drawn on.
In February 2011, the Government decided to put back the S$4.0 billion that it had drawn down from the Past Reserves. This is because the economy had recovered well from the recession, putting our fiscal position on a stronger footing. While there is no legal or constitutional obligation for the Government to return to Past Reserves any amount drawn, it is the responsible and prudent thing to do, once a Government has secured a stable fiscal position within its term. This is the way to uphold the philosophy that has enabled us to build up and maintain our reserves, and derive from it income each year to meet our strategic needs.
In response to the COVID-19 crisis, the Government had to protect lives through public health measures, and protect livelihoods through economic and social support measures.
The Government obtained President Halimah Yacob’s approval to draw from Past Reserves up to $52 billion in FY2020, $11 billion in FY2021, and $6 billion in FY2022.
The total expected draw on Past Reserves from FY2020 to FY2022 will be up to $42.9 billion (see here for details).
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