Government Defends Fiscal Prudence Amid Calls for Policy Review
Singapore’s national reserves cannot be defined by a fixed amount as “enough,” said Prime Minister Lee Hsien Loong in Parliament, emphasizing that future crises and economic uncertainties make it impossible to predict financial needs. Speaking during a debate on Feb 7, he cited the Covid-19 pandemic and potential geopolitical conflicts as examples of unforeseen challenges requiring strong financial reserves.
Debate Over Reserve Accumulation
The discussion stemmed from a motion filed by the Progress Singapore Party (PSP), calling for a review of Singapore’s budget and reserve accumulation policies. Non-constituency Members of Parliament Leong Mun Wai and Hazel Poa argued that maintaining high reserves should not come at the expense of present-day Singaporeans, especially as economic conditions evolve.
In response, Second Minister for Finance Indranee Rajah rejected the notion that Singapore has excess funds. She stressed that occasional revenue increases do not indicate fiscal slack, and financial planning should focus on long-term stability rather than short-term gains.
Parliament’s Decision and Government’s Position
The original motion, supported by the Workers’ Party (WP), called for reducing financial burdens while continuing to save for future generations. However, amendments proposed by People’s Action Party (PAP) MP Liang Eng Hwa shifted the emphasis to ensuring that budget and reserve policies remain “fiscally responsible and sustainable.” The amended motion was ultimately passed, despite objections from PSP and WP MPs.
Economic and Policy Considerations
While PSP suggested slowing down reserve accumulation and using a larger share of investment returns for the annual Budget, government officials warned against such changes. Nominated MP Neil Parekh highlighted that reserves play a crucial role in economic stability, while Liang Eng Hwa noted their impact on keeping borrowing costs low, maintaining a strong Singapore dollar, and reinforcing investor confidence.
Despite disagreements, Finance Minister Lawrence Wong affirmed that Singapore remains committed to economic growth as the foundation for redistribution and social progress. The government will continue balancing long-term financial security with immediate economic pressures, ensuring that Singapore remains resilient in an unpredictable global landscape.
