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When has the Singapore President's approval been sought to tap into past reserves?
The first ever drawdown on Singapore's past reserves was in 2009, while considerations to tap into the reserves have also been made prior to that.
SINGAPORE — As a custodian of Singapore's national reserves, the President plays a key role in overseeing the government's expenditure. This includes being constitutionally empowered with discretionary powers to approve or reject any government request to draw from the nation's past reserves.
What is past reserves?
Past reserves is a subset of Singapore's overall national reserves. It consists of the reserves accumulated during previous terms of government as a result of surpluses generated from previous annual budgets. Whenever the government's revenue exceeds its expenditures in a fiscal year, the excess funds are set aside into past reserves. These reserves act as a financial buffer and are preserved for future needs and emergencies.
In the past, there have been instances when Singapore faced economic challenges or crises, leading to the need to tap into past reserves. In each of these situations, the President's approval is required before any drawdown from past reserves can be made. This constitutional safeguard ensures that the reserves are used prudently and only in situations of critical national importance.
COVID-19 public health expenditure (2020 – 2022)
Most recently, as the COVID-19 pandemic wreaked global economic havoc and took millions of lives around the world, the government sought the approval of President Halimah Yacob to tap into the nation's past reserves in order to fund public healthcare expenditure.
During the crisis, the government sought President Halimah Yacob's approval to draw from past reserves of up to S$52 billion in 2020, S$11 billion in 2021, and S$6 billion in 2022. In the end, the total drawdown from past reserves over the three financial years was S$42.9 billion.
The funds were used to pay for expenses such as COVID-19 testing, clinical management and contact tracing, vaccination and therapeutics, isolation facilities, border management and as well as safe distancing measures. The government also used the funds to provide economic support to businesses and livelihoods that were impacted as a result of the pandemic.
"These draws are inevitable because we must garner necessary resources to protect Singaporeans and bolster our economy," said President Halimah as she gave her assent to the Supply Bill for the financial year 2022.
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Global financial crisis (2008 – 2009)
In October 2008, then-President S R Nathan gave his approval for a S$150 billion guarantee on all bank deposits in Singapore to be backed by past reserves until the end of 2010. The move was made as other countries were providing guarantees for bank deposits amidst the backdrop of the global financial crisis that was triggered by bank failures in the US and Europe.
The move to guarantee bank deposits backed by past reserves was done to prevent the risk of funds flowing out of Singapore, which could have led to severe economic repercussions for the nation even when Singapore's financial system was sound at the time. The guarantee covered all Singapore dollar and foreign currency deposits of individual and non-bank customers in banks, finance companies and merchant banks licensed by the Monetary Authority of Singapore (MAS). In the end, the guarantee lapsed without being triggered and past reserves were not drawn upon.
However, the subsequent recession in Singapore following the global financial crisis led to the nation's past reserves being drawn upon for the first time. In January 2009, then-President S R Nathan gave his approval for the government to draw down S$4.9 billion from the past reserves to fund two special schemes in light of Singapore's worst recession then since independence.
The two measures were the Jobs Credit Scheme which subsidised employers' wage bills and the Special Risk-Sharing Initiative which helped companies gain access to credit. The actual amount drawn for these two measures was S$4.0 billion.
As Singapore's economy eventually recovered from the recession, the government decided to put back the S$4.0 billion that it had drawn down from the past reserves in February 2011.
Asian financial crisis (1997 – 1999)
During the Asian financial crisis in the late 90s, the government resisted dipping into past reserves despite the economic downturn. In 1999, then-President Ong Teng Cheong said he would approve a government proposal to tap into past reserves. In response, then-Prime Minister Goh Chok Tong said there was no need to do so as the government had accumulated enough funds in current reserves to face any economic fallout.
In 2001, then-Deputy Prime Minister Lee Hsien Loong raised the possibility of using past reserves to tackle the recession in Singapore. However, this again turned out to be unnecessary and no requests to draw from past reserves were made.
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