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Slower growth means Singapore can no longer rebuild reserves if they are gone: PM Lee
Published Wed, Aug 16, 2023 · 12:40 pm
Prime Minister Lee Hsien Loong also addresses misconceptions about the reserves and how the government balances spending with investment returns.
PHOTO: MCI
SINGAPORE will not be able to build up its reserves again if they are exhausted, as growth is slower now and the country no longer runs such large budget surpluses, said Prime Minister Lee Hsien Loong.
“Once it is gone, it will never come back again. It is finished. You cannot build it up again,” he said in an interview with CNA on Singapore’s national reserves, released on Wednesday (Aug 16).
In three video clips, he explained about the reserves, addressed misconceptions and detailed how the government balances spending with investment returns.
The issue of Singapore’s reserves – and how they are managed – has resurfaced ahead of the upcoming presidential election. The president holds the
second “key” to the reserves, meaning that his approval is needed if the government wants to draw on past reserves.
Singapore’s unique approach to its reserves was enabled partly by how it could “create an elected president specifically for this purpose”, PM Lee noted in the interview.
He stressed that Singapore would be unable to rebuild its coffers if they are exhausted, as the economy no longer grows at the rates of the 1970s and early 1980s, of 8 per cent to 12 per cent year on year. Nor does the country still run budget surpluses of “5 per cent, sometimes 10 per cent” of gross domestic product.
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Under those circumstances, it was possible to put aside “some of this prosperity for a future rainy day”, said PM Lee. But today, growth has slowed while Singapore’s expectations and needs have expanded.
“So to say today, you put aside systematically 2 per cent, 3 per cent of GDP and build up a sovereign fund from scratch – I think it is very hard,” he said.
“I think we need to be very, very conscious that this is a Garden of Eden state. You may not always feel great, but please be aware this is the Garden of Eden because if you come out of it, you can’t go back in again.”