Exercise prudence as S'pore borrows for major projects: MPs

Singapore has to move with the times in the way it manages its finances - just as it did when it introduced its Net Investment Returns Contribution (NIRC) framework in 2008.

But it is equally important to remain steadfast in the values of prudence and discipline, and operate on a balanced budget while jealously safeguarding reserves for future generations, said MPs during the debate on the Budget statement yesterday.

Citing the Government's plan to issue up to $90 billion of new bonds to fund major infrastructure projects, Mr Liang Eng Hwa (Bukit Panjang) said: "If these items are funded under the annual Budget cycles, which is on a cash-flow basis, it will put significant strain on our other Budget allocations."

As the long-term infrastructure benefits current and future generations of Singaporeans, it would be more equitable to distribute the fiscal responsibility across generations through such a longer-term financing structure, he added.

In his Budget statement on Feb 16, Deputy Prime Minister Heng Swee Keat announced that under a proposed Significant Infrastructure Government Loan Act (Singa), bonds issued would finance a pipeline of major projects like MRT lines and tidal walls to protect against rising sea levels.

The borrowing limit will be set at $90 billion, among other safeguards to be included in legislation.

Ms Foo Mee Har (West Coast GRC) asked how this $90 billion limit on debt issuance was set.

"Would this limit be adjusted as GDP (gross domestic product) grows?" she asked.

"How vulnerable would we be if interest rates move up? What is the expected repayment burden on future generations? How would Singapore's AAA credit rating be impacted with the borrowing?"

Still, the MPs said they supported funding major, long-term infrastructure through borrowing, particularly given the prevailing low interest rates. - THE STRAITS TIMES