The most unique thing about Singapore’s finances is that we get a significant amount of money each year from our reserves, that can be spent for the good of Singaporeans, President Tharman said in a Facebook post (8 Jan 2024)
This is an outstanding fact, he said. It is outstanding because we are the only country that is not an oil producer that is able to benefit from our reserves this way.
The President, who is a custodian of our reserves, had just had a full briefing in the morning, together with the Council of Presidential Advisers (CPA), from DPM and Minister for Finance Lawrence Wong and his Ministry officials, as well as from our investment entities: GIC, Monetary Authority of Singapore, and Temasek.
The contribution from our reserves to the annual government budget is known as the Net Investment Returns Contribution (NIRC). It is based on the long-term projections of the returns that are likely to be earned from investing the reserves.
But before the Government can spend the projected returns from reserves, the President must first agree with these projections each year.
The whole system is designed to ensure that every generation of Singaporeans benefits from this contribution from our reserves. Including our great-grandchildren and those that come after them.
This is the opposite of what others experience in other countries where there are rising debts to pay for. The result is that on top of the taxes that most countries need to support ageing populations and rising healthcare costs, they also need to use more and more tax dollars to pay for what they have borrowed.
For the financial year which ended on 31 March 2023, the NIRC was approximately $22.4 billion. A decade ago, it was $7.3 billion for FY2012. The NIRC has increased by 300%!
If we keep this system working well and maintain a good balance between spending and reinvesting for future returns, it will benefit everyone for a long time to come.
