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Second Reading Speech by Mr Lawrence Wong, Minister for Finance, on the Government Borrowing (Miscellaneous Amendments) Bill

03 Nov 2021
A1. Mr Speaker, I beg to move, “That the Bill be now read a second time”.
A2. Sir, earlier this year, this House debated and passed the Significant Infrastructure Government Loan Act, or SINGA for short, to reactivate Government borrowing for financing nationally significant infrastructure, subject to strict safeguards. 
A3. The borrowings under SINGA are clearly distinguishable from a separate category of Government borrowing for non-spending purposes under the Local Treasury Bills Act, or LTBA, and the Government Securities Act, or GSA. 
A4. The LTBA and the GSA allow the Government to borrow, not for spending, but for specific purposes such as market development and meeting the investment needs of the Central Provident Fund. 
A5. As noted during the Second Reading of SINGA, the majority of our borrowings will continue to be raised under the LTBA and GSA. The proceeds from such borrowing cannot be spent by the Government. 
A6. So, to delineate between the two types of borrowing in legislation, this Bill before the House seeks to merge the LTBA into the GSA, and streamline our legislation on Government borrowings, so as to provide clarity on the Government’s debt profile. 
Merge LTBA into GSA
B1. Let me share some background on the LTBA and GSA. 

a. The LTBA authorises the issuance of Treasury bills to develop the domestic short-term debt market and to meet market demand for short-term Government debt securities.
b. The GSA authorises the issuance of longer-tenor securities like the  Singapore Government Securities, or SGS, to develop the domestic debt market and meet the investment needs of the Central Provident Fund. 
B2. Both the LTBA and GSA expressly provide that the proceeds of borrowings raised are to be paid into the Government Securities Fund. This is an important safeguard, because the monies in the Government Securities Fund can only be invested. This is why the monies raised under the LTBA and GSA cannot be used to finance the Government’s spending needs. 
B3. While the LTBA and GSA were introduced separately with different processes, the Government has gradually harmonised the treatment of Treasury Bills and SGS over the years.

a. For example, the LTBA was amended in 1996 to account for the proceeds and expenditures of Treasury Bills under the Government Securities Fund, instead of the Consolidated Fund, similar to Government securities in the GSA. 
b. In 2001, the minimum denomination for Treasury Bills of $10,000 was revised downwards to $1,000 to facilitate greater retail participation, similar to that for tradable securities under the GSA. 
c. In 2004, the GSA was amended to change the borrowing limit of Government securities issued from a gross to a net limit for a more meaningful measure of Government’s liabilities, similar to that for Treasury Bills under LTBA.
B4. This Bill is therefore introduced to merge the LTBA into the GSA.

a. The Government Securities Act will be renamed as the Government Securities (Debt Market and Investment) Act, which I will refer to as the renamed GSA for short, to reflect this consolidation within the name of the Act. 
b. The renamed GSA will provide for the issuance of Treasury Bills, and the existing LTBA will be repealed.
c. The changes introduced through this Bill are largely administrative in nature with no change to the substance of the individual Acts.
d. There is no change to the provision, limiting the use of monies in the Government Securities Fund from being used solely for investment purposes. Therefore, the monies raised under the Bill cannot be used for spending. 
B5. With the merger of the Acts, the current borrowing limits under the LTBA and GSA, which are $105 billion and $960 billion respectively, will be combined to form a single borrowing limit of $1,065 billion under the renamed GSA. There is no change to the overall borrowing limit. 
B6. As is the practice today, the Monetary Authority of Singapore, or the MAS, will continue to calibrate Treasury Bill and SGS issuances based on market development needs. And to ensure transparency, MAS will continue to publish the breakdown of outstanding SGS and Treasury Bills.
B7. There is also no change to the existing features and outstanding issuances of Treasury Bills and Government Securities issued under the LTBA and GSA. The outstanding Treasury Bills will be automatically subsumed under the renamed GSA.

Repeal borrowing provisions

B8. Besides the merging of LTBA into the GSA, this Bill will also repeal borrowing provisions in other Acts that are no longer necessary.
B9. Specifically, the Bill will repeal the External Loans Act and Treasury Deposit Receipts Act, as well as borrowing provisions in the Developmental Investment Fund Act.
B10. There are no outstanding borrowings under these Acts. With the SINGA and renamed GSA, the Government does not foresee the need to borrow under these Acts.
Consequential amendments to the Constitution and other legislation
B11. The Constitution and other acts such as the MAS Act will be amended to substitute references to LTBA and GSA with the renamed GSA, and remove references to the External Loans Act. The amendments to the Constitution will be raised by the Minister for Law after this. 
B12. We have consulted with the President on both this Bill and the amendments to the Constitution, as they provide for the raising of loans by the Government and a single borrowing limit for Government securities and Treasury Bills. The President is supportive of the Bills.  


C1. Mr Speaker, sir, let me conclude.
C2. This Bill consolidates various pieces of legislation on Government borrowings for specific non-spending purposes into a single legislation under the renamed GSA.
C3. Going forward, the Government will rely on the renamed GSA to borrow for specific non-spending purposes, and the SINGA to borrow for spending on nationally significant infrastructure. 
C4. We will ensure that the borrowings for spending and non-spending purposes are transparent and clearly differentiated in the processes for the issuances of securities, reporting and public communications.
C5. For example, the new SGS issued for infrastructure financing has been named SGS(Infrastructure) bonds, and existing SGS bonds renamed as SGS(Market Development) bonds, to reflect the different purposes of borrowing.
C6. Again, I would like to emphasise that the Singapore Government has a strong balance sheet with no net debt. 
C7. Borrowings for non-spending purposes, which will be consolidated under the renamed GSA in this Bill, will continue to make up the majority of the Singapore Government's borrowings. Through this Bill, we provide greater clarity on the Government’s debt profile. 
C8. Sir, with this, I beg to move.