Today, I met with Minister Lawrence Wong and his officials from MOF for the annual meeting to discuss the Government’s spending limit under the Net Investment Returns framework. Senior representatives from GIC, MAS and Temasek were also present.
A key parameter in the planning of our national Budget is the expected long term real rates of return (ELTRROR) on our investment assets. The ELTRROR is used to determine the amount of reserves that the Government can spend in the coming fiscal year.
Similar to previous years, we discussed the global economic outlook, methodologies and basis on which the projections were derived and certified by the respective Boards. But this year, we also paid greater attention to the long-term effects of COVID-19 and climate change on our investments, and how they would impact the derivation of the ELTRROR. I am satisfied that our agencies are looking closely into these issues.
I have referred the proposal to the CPA for its advice, and will give my response to the Government thereafter. With my concurrence, the Government can subsequently apply these rates to its relevant assets, to derive the Net Investment Return Contribution for use in Budget 2022.
MCI Photo by Ngau Kai Yan
