Photo of Lee Hsien Loong and Ho Ching from Facebook

Finance Minister Heng Swee Keat yesterday (Feb 19) revealed that the Singapore government does not have enough money for the construction of Terminal 5 and upgrade the existing MRT lines. As such, the government will now start borrowing money from statutory boards and state-owned companies under Temasek Holdings and GIC:

“For major infrastructure projects, hefty upfront investments are often needed… The Government is looking at borrowing by statutory boards and Government-owned companies which build infrastructure, which will help spread the cost of certain larger investments over more years. These infrastructure projects, once completed, will generate economic returns over many years. The borrowing arrangement for these projects will hence help distribute the share of funding more equitably across generations.”

Minister Heng Swee Keat then spin his propaganda lie saying that borrowing money “helps develop” Singapore’s bond market and enhance the credibility of the lenders:

“Such long-term borrowings will also help develop Singapore’s bond market. To help lower the financing cost, the Government will also consider providing guarantees for some of these long-term borrowings for critical national infrastructure. A government guarantee will not only enhance the confidence of creditors, but also tap the strengths of Singapore’s reserves to back infrastructure projects, without directly drawing on the reserves.”

The Finance Minister however waxed lyrical about how the government is not spending more than it can earn, and insisted that the full investment returns of Temasek Holdings and GIC should remain untouched:

“Over the last 10 years since its implementation, the NIR (Net Investment Returns) contribution has more than doubled from S$7 billion in FY2009 to an estimated S$15.9 billion in FY2018, and it is now the largest contributor to Singapore’s revenues – more than any single tax. The country currently spends up to 50 per cent of expected net investment returns, and the remainder goes to the reserves. If instead, we used 100 per cent of the returns, the principal sum of the reserves will stagnate over time, and the NIRC as a share of GDP will consequently fall as our economy grows. The impact of this will not be trivial given that our budget now relies on the NIRC as our largest source of revenue. If the Government spent more than the investment returns, it will eat into the country’s nest egg and, in time, the diminished reserves will generate a progressively smaller stream of income in the years that follow until eventually the reserves are exhausted. This is not the Singapore way.”

The borrowing will be approved by ex-PAP MP and current President Halimah Yacob.