8-2-2024 (SINGAPORE) Singapore’s substantial financial reserves are the result of fiscal prudence and sacrifice by earlier generations, and it is the duty of current generations to protect this legacy, said Prime Minister Lee Hsien Loong in Parliament this week.
He stressed that the reserves were built up during a unique period in Singapore’s history when large budget surpluses could be set aside. This would be near impossible to replicate today. Safeguarding the reserves is thus critical to maintain a nest egg for future needs and emergencies.
PM Lee was responding to opposition calls to draw more heavily on the reserves instead of raising taxes like the upcoming GST hike. But defining an optimal size for the reserves is impossible, he said, given uncertainty over what crises may emerge in future.
The reserves already provided a buffer during crises like the 2008 global financial crisis and COVID-19 pandemic, where tens of billions were drawn down. Ukraine’s ongoing conflict shows reserves may be needed to weather even greater turmoil.
The ’50-50 rule’ allows up to half of investment returns to be used for budget spending each year. This balances present and future needs, limiting erosion of the reserves’ value. Attempting to spend more could bankrupt Singapore down the road.
Opposition MPs argue too much is set aside in trusts for future infrastructure and social spending. But PM Lee emphasized these funds benefit current citizens too. And proceeds from land sales are prudently reinvested rather than treated as renewable revenue.
While acknowledging public pressure to draw more on reserves, PM Lee said the intergenerational compact to preserve Singapore’s savings was forged collectively. The two-key system also constitutionally protects the reserves.
He invited the opposition to campaign openly at the next election on changing rules to access more reserves. The PAP believes its prudent stewardship is vital for Singapore’s long-term interests.
Securing Singapore’s future requires upholding this social compact across generations. The reserves are a legacy to treasure, not raid, PM Lee emphasized.
