PM Lee stresses the role reserves play during financial crisis
By S Ramesh | Posted: 09 May 2011 1943 hrs
SINGAPORE : Singapore's Prime Minister Lee Hsien Loong has said that during the financial crisis in 2009, the government had to use, in some cases, the entire quantum of the country's reserves, to back the Singapore dollar.
In a speech at the 30th anniversary of the Government Investment Corporation of Singapore (GIC), Mr Lee said the moves helped to maintain confidence in Singapore's banking and financial system, which also helped Singapore pull out of the crisis.
In his first official event after the General Election, Mr Lee stressed that it is necessary to continue slowly accumulating the country's reserves, which are mainly used to improve the lives of Singaporeans.
PM Lee, who is also the GIC's deputy chairman, focused his message on how the government needed to get its politics right and to make sure there is political support for its policies.
He emphasised to the audience of corporate honchos and fund managers that the government's aim is to benefit all Singaporeans.
The recurrent theme of his message was that inclusive growth is needed and that there must be policies to help those affected by globalisation and those who are left behind.
Mr Lee said: "We have many different forms of assistance for vulnerable groups, but it goes beyond specific items where you can calculate dollars and cents to a sense of reassurance, concern and empathy and a sense that we are in the same boat together - we will take care of one another and we are going to make this together, sink or swim."
"It is not easy for citizens to cope with these changes even though overall standards of living are rising and the country has been making progress as has been the case in Singapore.
"If you look at it over the last five years, it has been a real roller-coaster ride, we have had plus 14.5 per cent growth in 2010, we have had zero growth the two years before that and the mood of optimism and alarm has swung to extremes.
"Overall, if you take the last five years, we have made five per cent growth on the average, incomes have gone up in real terms despite higher inflation, households have more people employed, our infrastructure has improved, our economy is more competitive."
He added: "We have made progress, but Singaporeans expect more because the going is going to be more challenging and therefore my newly-elected PAP government has its work cut out for it."
The prime minister also spoke of the need to buffer the economy against volatility and storms, and to do this, he said it was important to continue accumulating the reserves. In this regard, he said GIC has been playing an important role.
Some opposition members had questioned the need to constantly focus on accumulating the reserves during the hustings and had suggested using the reserves to pay for various programmes.
But Mr Lee emphasised the need to be prudent, giving the example of how the reserves had helped to maintain confidence in Singapore's banking system during the financial crisis.
He said the government drew down S$4 billion to help Singaporeans - with programmes like Jobs Credit to keep workers employed - and also used the reserves to shore up the Singapore dollar. He said at times, this amounted to the entire quantum of reserves - hundreds of billions - and the move had worked.
Mr Lee said: "We relied on them to give confidence and to back our guarantees and our support for the Singapore collar and the banking system - not just with a few billion dollars but tens of billions of dollars or in some cases potentially with all the reserves that we had so that nobody would be tempted to give it a try and see whether we would run out of ammunition before they did.
"We need to hold fast to these prudent policies and to maintain and continue gradually to build up these reserves for a rainy day. What reserves we have accumulated, we have to invest prudently and shrewdly with a long-term view - rationally, professionally and insulated from political pressures - so that we can make right investment decisions in the long-term interests of Singapore."
Hence Mr Lee believes that professional management of the reserves is necessary as there will be long-term needs which have to be paid for.
The prime minister said Singapore has bright prospects over the next 10 years, but added that global uncertainties will be the "new norm", and the country has to be cautious as there is no magic formula for success.
- CNA/al
By S Ramesh | Posted: 09 May 2011 1943 hrs
SINGAPORE : Singapore's Prime Minister Lee Hsien Loong has said that during the financial crisis in 2009, the government had to use, in some cases, the entire quantum of the country's reserves, to back the Singapore dollar.
In a speech at the 30th anniversary of the Government Investment Corporation of Singapore (GIC), Mr Lee said the moves helped to maintain confidence in Singapore's banking and financial system, which also helped Singapore pull out of the crisis.
In his first official event after the General Election, Mr Lee stressed that it is necessary to continue slowly accumulating the country's reserves, which are mainly used to improve the lives of Singaporeans.
PM Lee, who is also the GIC's deputy chairman, focused his message on how the government needed to get its politics right and to make sure there is political support for its policies.
He emphasised to the audience of corporate honchos and fund managers that the government's aim is to benefit all Singaporeans.
The recurrent theme of his message was that inclusive growth is needed and that there must be policies to help those affected by globalisation and those who are left behind.
Mr Lee said: "We have many different forms of assistance for vulnerable groups, but it goes beyond specific items where you can calculate dollars and cents to a sense of reassurance, concern and empathy and a sense that we are in the same boat together - we will take care of one another and we are going to make this together, sink or swim."
"It is not easy for citizens to cope with these changes even though overall standards of living are rising and the country has been making progress as has been the case in Singapore.
"If you look at it over the last five years, it has been a real roller-coaster ride, we have had plus 14.5 per cent growth in 2010, we have had zero growth the two years before that and the mood of optimism and alarm has swung to extremes.
"Overall, if you take the last five years, we have made five per cent growth on the average, incomes have gone up in real terms despite higher inflation, households have more people employed, our infrastructure has improved, our economy is more competitive."
He added: "We have made progress, but Singaporeans expect more because the going is going to be more challenging and therefore my newly-elected PAP government has its work cut out for it."
The prime minister also spoke of the need to buffer the economy against volatility and storms, and to do this, he said it was important to continue accumulating the reserves. In this regard, he said GIC has been playing an important role.
Some opposition members had questioned the need to constantly focus on accumulating the reserves during the hustings and had suggested using the reserves to pay for various programmes.
But Mr Lee emphasised the need to be prudent, giving the example of how the reserves had helped to maintain confidence in Singapore's banking system during the financial crisis.
He said the government drew down S$4 billion to help Singaporeans - with programmes like Jobs Credit to keep workers employed - and also used the reserves to shore up the Singapore dollar. He said at times, this amounted to the entire quantum of reserves - hundreds of billions - and the move had worked.
Mr Lee said: "We relied on them to give confidence and to back our guarantees and our support for the Singapore collar and the banking system - not just with a few billion dollars but tens of billions of dollars or in some cases potentially with all the reserves that we had so that nobody would be tempted to give it a try and see whether we would run out of ammunition before they did.
"We need to hold fast to these prudent policies and to maintain and continue gradually to build up these reserves for a rainy day. What reserves we have accumulated, we have to invest prudently and shrewdly with a long-term view - rationally, professionally and insulated from political pressures - so that we can make right investment decisions in the long-term interests of Singapore."
Hence Mr Lee believes that professional management of the reserves is necessary as there will be long-term needs which have to be paid for.
The prime minister said Singapore has bright prospects over the next 10 years, but added that global uncertainties will be the "new norm", and the country has to be cautious as there is no magic formula for success.
- CNA/al
