In 1959, Singapore won self-governing status from the British, and general elections were held. Dr Goh Keng Swee resigned as a civil servant to contest as a PAP candidate. When the PAP won, Dr Goh became Singapore’s first Finance Minister.
He soon discovered that the government was almost broke, and expected a budget deficit of $14 million that year. Dr Goh immediately introduced drastic measures to cut spending, including cutting civil service salaries. This was obviously unpopular, but Dr Goh stood firm.
When he delivered the Budget at the end of the year, he proudly declared that the government had achieved a small surplus of $1 million. He had drafted the speech personally, after secluding himself on the remote island of Raffles Lighthouse to concentrate on the task. Dr Goh set the tone for the PAP government, which ever since has steadfastly upheld budget discipline and fiscal prudence.
In his ministerial statement delivered on 5 July 2021, Finance Minister Lawrence Wong said, “𝐖𝐞 𝐚𝐫𝐞 𝐯𝐞𝐫𝐲 𝐟𝐨𝐫𝐭𝐮𝐧𝐚𝐭𝐞 𝐭𝐨 𝐛𝐞 𝐰𝐡𝐞𝐫𝐞 𝐰𝐞 𝐚𝐫𝐞 𝐭𝐨𝐝𝐚𝐲, 𝐭𝐡𝐚𝐧𝐤𝐬 𝐭𝐨 𝐭𝐡𝐞 𝐟𝐨𝐫𝐞𝐬𝐢𝐠𝐡𝐭 𝐚𝐧𝐝 𝐟𝐢𝐬𝐜𝐚𝐥 𝐩𝐫𝐮𝐝𝐞𝐧𝐜𝐞 𝐨𝐟 𝐨𝐮𝐫 𝐟𝐨𝐫𝐞𝐟𝐚𝐭𝐡𝐞𝐫𝐬.”
Mr Wong said that the Government will not hesitate to ‘use the full measure of our fiscal firepower to protect the lives and livelihoods of Singaporeans’. However, drawing on our past reserves is a major move that the Government will do so only in exceptional circumstances.
Here’s an excerpt of his speech:
Drawing on Past Reserves is a major move. We do so only in exceptional circumstances.
That was the case last year. Our economy shrank by 5.4% – the largest fall since independence. Our resident unemployment rate rose to nearly 5%.
At the start of this Financial Year, because we were starting out on a new term, we had to draw on Past Reserves again to finance the continuing COVID-related measures in the Budget.
Let me be clear: we will not hesitate to use the full measure of our fiscal firepower to protect the lives and livelihoods of Singaporeans.
But we also need to be careful about the state of our public finances, and ensure they are sustainable for the future.
In many countries, COVID-19 has led to massive increases in debt levels, which have not been seen since the end of the Second World War.
Not many people are paying attention to how all of these debts will be serviced. They may look affordable now, but will not be so once interest rates increase to more normal levels.
The day of reckoning will come, and the burden will surely fall on the young and future generations.
𝐖𝐞 𝐚𝐫𝐞 𝐨𝐧𝐞 𝐨𝐟 𝐭𝐡𝐞 𝐯𝐞𝐫𝐲 𝐟𝐞𝐰 𝐞𝐱𝐜𝐞𝐩𝐭𝐢𝐨𝐧𝐬 𝐭𝐨 𝐭𝐡𝐢𝐬 𝐭𝐫𝐞𝐧𝐝 𝐨𝐟 𝐫𝐢𝐬𝐢𝐧𝐠 𝐩𝐮𝐛𝐥𝐢𝐜 𝐝𝐞𝐛𝐭 𝐚𝐫𝐨𝐮𝐧𝐝 𝐭𝐡𝐞 𝐰𝐨𝐫𝐥𝐝.
𝐖𝐞 𝐚𝐫𝐞 𝐯𝐞𝐫𝐲 𝐟𝐨𝐫𝐭𝐮𝐧𝐚𝐭𝐞 𝐭𝐨 𝐛𝐞 𝐰𝐡𝐞𝐫𝐞 𝐰𝐞 𝐚𝐫𝐞 𝐭𝐨𝐝𝐚𝐲, 𝐭𝐡𝐚𝐧𝐤𝐬 𝐭𝐨 𝐭𝐡𝐞 𝐟𝐨𝐫𝐞𝐬𝐢𝐠𝐡𝐭 𝐚𝐧𝐝 𝐟𝐢𝐬𝐜𝐚𝐥 𝐩𝐫𝐮𝐝𝐞𝐧𝐜𝐞 𝐨𝐟 𝐨𝐮𝐫 𝐟𝐨𝐫𝐞𝐟𝐚𝐭𝐡𝐞𝐫𝐬.
When the Reserves Protection Framework was introduced in 1991, no one could have foreseen that a pandemic of this magnitude would hit us one day.
𝐁𝐮𝐭 𝐢𝐭 𝐢𝐬 𝐩𝐫𝐞𝐜𝐢𝐬𝐞𝐥𝐲 𝐭𝐡𝐢𝐬 𝐝𝐢𝐬𝐜𝐢𝐩𝐥𝐢𝐧𝐞 𝐨𝐟 𝐬𝐞𝐭𝐭𝐢𝐧𝐠 𝐚𝐬𝐢𝐝𝐞 𝐫𝐞𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐟𝐨𝐫 𝐫𝐚𝐢𝐧𝐲 𝐝𝐚𝐲𝐬 𝐭𝐡𝐚𝐭 𝐡𝐚𝐬 𝐩𝐮𝐭 𝐮𝐬 𝐢𝐧 𝐚 𝐬𝐭𝐫𝐨𝐧𝐠 𝐟𝐢𝐬𝐜𝐚𝐥 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧 𝐭𝐨 𝐫𝐞𝐬𝐩𝐨𝐧𝐝 𝐝𝐞𝐜𝐢𝐬𝐢𝐯𝐞𝐥𝐲 𝐭𝐨 𝐭𝐡𝐢𝐬 𝐜𝐮𝐫𝐫𝐞𝐧𝐭 𝐜𝐫𝐢𝐬𝐢𝐬.
We already expect to draw up to $53.7 billion from our Past Reserves – 𝐢𝐭’𝐬 𝐚𝐧 𝐚𝐦𝐨𝐮𝐧𝐭 𝐰𝐡𝐢𝐜𝐡 𝐰𝐞 𝐚𝐫𝐞 𝐧𝐨𝐭 𝐥𝐢𝐤𝐞𝐥𝐲 𝐭𝐨 𝐛𝐞 𝐚𝐛𝐥𝐞 𝐭𝐨 𝐩𝐮𝐭 𝐛𝐚𝐜𝐤 𝐚𝐧𝐲𝐭𝐢𝐦𝐞 𝐬𝐨𝐨𝐧, 𝐢𝐟 𝐚𝐭 𝐚𝐥𝐥.
Our expenditure in FY2020 was the highest ever in the history of our country; and this unprecedented fiscal response has also led to the 𝐥𝐚𝐫𝐠𝐞𝐬𝐭 𝐛𝐮𝐝𝐠𝐞𝐭 𝐝𝐞𝐟𝐢𝐜𝐢𝐭 𝐢𝐧 𝐒𝐢𝐧𝐠𝐚𝐩𝐨𝐫𝐞’𝐬 𝐡𝐢𝐬𝐭𝐨𝐫𝐲.
𝐍𝐨𝐰 𝐭𝐡𝐚𝐭 𝐭𝐡𝐢𝐧𝐠𝐬 𝐚𝐫𝐞 𝐛𝐞𝐭𝐭𝐞𝐫, 𝐰𝐞 𝐬𝐡𝐨𝐮𝐥𝐝 𝐫𝐞𝐟𝐫𝐚𝐢𝐧 𝐟𝐫𝐨𝐦 𝐝𝐫𝐚𝐰𝐢𝐧𝐠 𝐟𝐮𝐫𝐭𝐡𝐞𝐫 𝐨𝐧 𝐏𝐚𝐬𝐭 𝐑𝐞𝐬𝐞𝐫𝐯𝐞𝐬. 𝐈𝐧𝐬𝐭𝐞𝐚𝐝 𝐰𝐞 𝐰𝐢𝐥𝐥 𝐟𝐮𝐧𝐝 𝐭𝐡𝐞 𝐬𝐮𝐩𝐩𝐨𝐫𝐭 𝐦𝐞𝐚𝐬𝐮𝐫𝐞𝐬 𝐮𝐬𝐢𝐧𝐠 𝐫𝐞𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐭𝐡𝐚𝐭 𝐰𝐞𝐫𝐞 𝐚𝐩𝐩𝐫𝐨𝐯𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐲𝐞𝐚𝐫’𝐬 𝐁𝐮𝐝𝐠𝐞𝐭.
𝐓𝐡𝐚𝐭 𝐢𝐬 𝐭𝐡𝐞 𝐫𝐞𝐬𝐩𝐨𝐧𝐬𝐢𝐛𝐥𝐞 𝐰𝐚𝐲 𝐭𝐨 𝐦𝐚𝐧𝐚𝐠𝐞 𝐨𝐮𝐫 𝐟𝐢𝐧𝐚𝐧𝐜𝐞𝐬.