The Singapore Government is gearing up to issue more Government securities, with a significant new limit set at S$1.515 trillion. This increase is part of a broader strategy to meet the growing investment needs of the Central Provident Fund (CPF) and to foster a vibrant debt market.
Parliamentary Approval
On 12 November 2024, the motion to raise this limit by S$450 billion was approved by lawmakers. This increase is expected to remain in place until 2029, building on the previous limit of S$1.065 trillion established in 2021.
Focus on Special Singapore Government Securities
- Over 60% of the new issuance is anticipated to come from Special Singapore Government Securities (SSGS).
- SSGS are specifically designed for CPF investments and are fully guaranteed by the government.
Chee Hong Tat, Second Minister for Finance, highlighted that CPF balances are likely to grow due to rising wages and recent CPF policy enhancements, with a 3.2% increase in median gross monthly income reported from 2018 to 2023.
Investment Needs and Market Development
The remaining issuance will support various Treasury Bills (T-Bills), Singapore Savings Bonds (SSB), and Singapore Government Securities aimed at developing a robust debt market. This supports the corporate and retail debt market while meeting the demand for high-quality liquid assets.
No Impact on Fiscal Position
It’s important to note that the proceeds from these government securities will not fund government spending. According to the Ministry of Finance, Singapore’s debt is fully backed by assets, ensuring a sustainable borrowing environment. This prudent approach helps prevent excessive burdens on future generations.
Addressing Concerns
Some Members of Parliament, including Jamus Lim from the Workers’ Party, raised questions regarding the scale of the increase and its implications for interest repayments. Mr Chee reassured that the issuance aligns with historical trends and is essential for maintaining a vibrant financial landscape.
The move to increase the issuance limit is seen as a strategic measure to bolster market confidence and ensure that adequate funds are available to support crucial financial mechanisms, particularly in light of Singapore’s growing economic needs.