A misperception that crops up from time to time is that former President Ong had been denied the information needed for him to perform an effective role in protecting the Past Reserves. In fact, President Ong was given all the information required for the purpose. This information included the value of all the Governments financial assets, as well as a listing of physical assets, such as buildings and land.

At his 16 July 1999 press conference, President Ong spoke of how he had been informed by the Accountant-General that it would take "52 man-years" to produce the value of the full list of physical assets of the Government.

The facts of the case were explained by former Prime Minister Goh Chok Tong in Parliament on 17 August 1999, as summarised below:

The President's Office had requested a listing of physical assets from the Accountant-General on 18 Jun 1996. At a meeting with the President on 14 Aug 1996 (i.e. less than two months later), the Accountant-General provided a listing of State buildings, while the Commissioner of Lands provided a listing of State lands.

Updates were subsequently sent to the President's Office.

It was at this meeting that the President remarked that to protect the Past Reserves, the reserves should ideally be denominated in dollar value. To this, the Accountant-General said that it would take 56 man-years [6] to conduct a complete valuation of the physical assets, even though he had already produced the listing (without valuation figures).

The Attorney-General's Chambers subsequently advised that there was no need to revalue all State properties at each changeover of the term of Government, as the question of whether Past Reserves were being drawn did not arise unless a piece of land was actually about to be sold off or alienated. At the point of sale, land is valued, and the Reserves protection framework requires only that the land be sold at fair market value.

Furthermore, the proposed revaluation would be a waste of resources. First, the reality was that much of State land would remain as State land, i.e. unsold. Second, the value of each piece of land depended on planning and zoning restrictions, which the Government could change.

Click here for the Parliamentary speeches by former Prime Minister and former Minister for Finance Dr Richard Hu (17 August 1999)

Click here for the subsequent Parliamentary Q&As (17 August 1999)

[6] "56 man-years" does not mean it takes 56 years to complete the task. A man-year is a measure of the amount of work to be done, and not of the time it will take to do it.

The Singapore Government operates on a balanced budget over each term of Government. It also has a strong balance sheet that has assets well in excess of its liabilities.

The Government does not borrow* to fund its Budget. Under the Government Securities Act, the Singapore Government cannot spend the monies raised from three existing domestic debt securities it issues: Singapore Government Securities (SGS), Special Singapore Government Securities (SSGS), and Singapore Savings Bonds (SSB).

SGS are marketable debt instruments issued for purposes of developing Singapore's debt markets. They provide a risk-free benchmark against which other risky market instruments are priced off.

SSGS are non-tradable bonds issued specifically to the Central Provident Fund (CPF) Board, Singapores national pension fund. Singaporeans CPF monies are invested in these special 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.

SSB are non-tradable bonds issued to provide individual investors with a long-term saving option.

All borrowing proceeds from the issuance of SGS, SSGS, and SSB are invested. These investment returns are more than sufficient to cover the debt servicing costs.

More details of Singapore Government Borrowings are found at https://www.mof.gov.sg/Resources/Feature-Articles/SG-Borrowings.

*Refers to borrowings through the Government Securities Act.

Net Investment Returns Contribution (NIRC) comprises:

• Up to 50% of the Net Investment Returns (NIR) on the net assets invested by GIC, MAS and Temasek; and

• Up to 50% of the Net Investment Income (NII) derived from past reserves from the remaining assets.
  
  

The annual NIRC amount is published in each years Government Budget.

Prior to FY2009, there was only the NII component.

The NIR component was introduced in FY2009 with the implementation of the NIR framework, which allows the Government to spend up to 50% of the expected long-term real returns (including capital gains) from the net assets invested by our investment entities.

Given their strategic importance, it is vital that we enhance the long-term value of our reserves. To achieve this, the assets are invested professionally and on a strictly commercial basis, with the aim of generating sustainable returns over the long term.

The Governments assets are mainly managed by GIC Private Limited. The Government also places deposits with the MAS; in turn, MAS as a statutory board holds its own assets on its balance sheet. In addition, the Government is the sole equity shareholder of Temasek Holdings (Temasek). Temasek owns the assets on its balance sheet.

Information on the Governments deposits with MAS is available at http://www.mas.gov.sg/Statistics/Reserve-Statistics/Monetary-Authority-Assets-and-Liabilities.aspx.

Monetary Authority of Singapore (MAS)

The MAS, as the central bank of Singapore, manages the Official Foreign Reserves (OFR) of Singapore. Information on the OFR is available here.

Being a central bank, MAS is the most conservative of the three investment entities, with a significant proportion of its portfolio invested in liquid financial market instruments.

GIC Private Limited

GIC is a professional fund management organisation that manages Government assets. Its objective is to achieve good long-term returns to preserve and enhance the international purchasing power of the reserves.

GIC is a fairly conservative investor, with a globally diversified portfolio spread across various asset classes. Most of its investments are in the public markets, with a smaller component in alternative investments such as private equity and real estate.

Temasek Holdings

Temasek is an investment company managed on commercial principles to create and deliver sustainable long-term value for its stakeholders.

Temasek is an active, value-oriented equity investor that aims to maximise shareholder value over the long term.

Yes, our assets are much larger than our liabilities. There is no net Government debt. Singapore is in fact a net creditor country, not a debtor country.

This is why international credit rating agencies give the Singapore Government the highest short and long-term credit ratings of AAA.

Our top credit ratings reflect the following:

a. a. Majority of the Singapore Government borrowings are for non-spending purposes. . Under the Government Securities Act, the Singapore Government cannot spend the monies raised from Singapore Government Securities (SGS), Special Singapore Government Securities (SSGS), Singapore Savings Bonds (SSB), and Reserves Management Government Securities (RMGS). SGS are issued to develop the domestic debt market and SSGS are bonds issued to the Central Provident Fund (CPF) Board with full Government guarantee. SSB are issued to provide individual investors with a long-term saving option. RMGS are issued to the Monetary Authority of Singapore (MAS) for the sole purpose of facilitating the transfer of Official Foreign Reserves (OFR) not needed by MAS, to the Government for longer-term management by GIC.

b. All borrowing proceeds from SGS, SSGS, SSB, and RMGS are therefore invested. The investment returns are more than sufficient to cover the debt servicing costs.

c. Only a small proportion of Government borrowings is for spending purposes, under the Significant Infrastructure Government Loan Act (SINGA). Under SINGA, the Government borrows to finance and capitalise nationally significant infrastructure, and there are strict safeguards under the SINGA to ensure prudence in borrowing.

d. The Singapore Government has a strong balance sheet that has assets well in excess of its liabilities. This is why it is able to earn significant investment income on its net assets (see question on "Is our CPF money safe? ").

A key principle underlying Singapores long-term budgetary objectives is to maintain a balanced budget over the course of a term of Government. This is a prudent approach to fiscal policy that some other countries are seeking to adopt.

Looking only at the liabilities (i.e. debts) alone does not discriminate between two countries with the same level of debt but with very different levels of assets.

More details of Singapore Government Borrowings are found here .

*Refers to borrowings through the Government Securities Act.

Yes, your CPF monies are safe as all CPF monies are invested in securities (SSGS [7]) that are issued and guaranteed by the Singapore Government. The full resources of the Government back this guarantee that CPF monies will be paid back. As the Singapore Government is one of the few remaining triple-A credit-rated governments in the world, this is a solid guarantee.

To elaborate further:

a. The Government is in a strong reserves position, i.e. its assets far exceed its liabilities (CPF liabilities in the form of SSGS are a part of these liabilities). The strong reserves position can be seen from the investment returns that are made available for spending on the Government Budget or Net Investment Returns Contribution (NIRC). Over the past five years, NIRC provided on average a revenue stream of around $17 billion or about 3.5% of GDP.

b. What this means is that even after deducting all the Governments liabilities (including CPF monies), the remaining net assets produce significant returns. The NIRC is drawn from returns on assets in excess of the liabilities, not gross assets. (For more information, see summary under Our Nation's Reserves, Section II.) It should be further noted that, as stipulated in the Constitution, the NIRC recorded in the Government Budget only comprises up to 50% of the expected returns on the reserves. The NIRC figures are submitted to the Presidents Office and audited by the Auditor-Generals Office.

c. If the Governments assets had not been adequate to meet its liabilities, there would have been no contribution from the investment returns on reserves in the Government Budget.

[7] Special Singapore Government Securities (SSGS) are non-tradeable Government bonds issued to the CPF Board. The securities earn for the CPF Board a coupon rate that is pegged to CPF interest rates that members receive.

The Government plays no role in decisions on individual investments that are made by GIC, MAS and Temasek. At the GIC and MAS, whose boards include Ministers, these investment decisions are entirely the responsibility of their respective management teams.

In the case of Temasek, where the Government has no representation on the Board, investment decisions are fully independent of any Government involvement or influence.

The Governments role is instead as follows:

• First, the Government establishes the overall investment mandates and objectives of GIC, MAS and Temasek.
  

• Second, the Government ensures that each of these entities has a competent board to oversee the management and seek to ensure that their respective mandates are met.
  

• Third, the Government systematically reviews the overall risks of its whole portfolio of assets invested by the three entities. This includes monitoring whether there is appropriate diversification in terms of asset classes, sectors and geographies. The Government also assesses the impact of various adverse global scenarios across medium to long-term timeframes on the whole portfolio, to ensure that the downside risks to the whole portfolio are not excessive.
  

• Fourth, based on the overall risk profile of the Governments portfolio, it decides how government capital should be allocated among the three entities. This takes into account the different investment orientations of MAS, GIC and Temasek, which place them at different parts of the spectrum of investment risk.

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).

The NIR framework ensures that the investment returns are tapped for spending in a disciplined and prudent way. Under the framework:

• The Government can only spend up to 50% of the long-term expected real returns.
  

• The NIR framework uses real rates of return, i.e. after netting off inflation, to protect the real value of our reserves.
  

• The NIR framework allows the Government to spend only from returns on the net assets, i.e. the excess of assets over liabilities invested by our investment entities, minus the liabilities of the Government. This ensures that we set aside returns to cover the costs of servicing our liabilities.
  

• There is a rigorous process in place for determining the long-term expected real rates of return of the investment entities.
  

• Before the start of each financial year, the rates are proposed by the Boards of the investment entities, based on detailed study and assessments by investment professionals in the three agencies, who also draw on a range of external expert views.
  

• The Ministry of Finance undertakes a thorough review of the methodologies used by the investment entities to be assured that their approach is sound and the estimated long-term rates of return are reasonable. MOF will then propose the expected long-term real rates of return to be applied to the net assets invested by the investment entities for the President's concurrence.
  

• The President consults with the Council of Presidential Advisers (CPA) before deciding on whether to agree with the Government's proposal.
  

• In the event that the Government and President do not agree to any of the expected rates of return, the respective 20-year historical average rates of return will be used to compute how much the Government can spend. The 20-year historical rate of return provides a neutral and pragmatic basis for resolving any dispute between the President and the Government, and avoids paralysing the government of the day.
  

• After the close of the financial year, the Minister for Finance will certify to the President the amount of NIR that the Government has actually taken into the Budget, within the caps specified in the Constitution.

No. An occasional misperception is that the Government made the Constitutional amendments in 2002 and 2004 to allow for the transfer of Past Reserves between Fifth Schedule entities and the Government so as to be able to conceal investment losses. This is wrong.

We have explained that a transfer of funds cannot be used to hide investment losses (see question on "Has the Government transferred funds to Temasek or GIC to show better performance? ").

The amendments in 2002 and 2004 were made to enable the transfer of Past Reserves within the Reserves protection framework (i.e. among the Government and Fifth Schedule entities), without any loss of protection to Past Reserves. Past Reserves cannot be transferred outside of the Reserves protection framework without the approval of the President. The amendments in 2002 and 2004 did not alter this position.

Past Reserves may need to be transferred to facilitate the restructuring of Fifth Schedule entities to better deliver public services. For example, the merger of the then-Board of Commissioners of Currency, Singapore (BCCS) with Monetary Authority of Singapore (MAS) in 2002 required the transfer of BCCS Past Reserves to MAS.

In transferring the Past Reserves from BCCS to MAS, there was no loss in the amount of Past Reserves protected. This was because the Board of Directors of MAS had resolved that the Past Reserves transferred from BCCS would be added to the Past Reserves of MAS and protected.

The Constitutional amendments make clear that there is no draw on Past Reserves as long as (i) Past Reserves are being transferred among entities that are within the Reserves protection framework; and (ii) the receiving entity undertakes to protect the Past Reserves that are transferred over. In such circumstances, the overall amount of Past Reserves being protected is unchanged, and hence the Presidents approval need not be obtained for such transfers.