Speech by Second Minister for Finance Mr Chee Hong Tat for Motion to Increase the Issuance Limit for Government Securities and Treasury Bills Under The Government Securities (Debt Market and Investment) Act 1992

GOVERNMENT SECURITIES AND TREASURY BILLS (Motion)

Mr Speaker Sir, I beg to move, 

“That this Parliament, in accordance with Article 144(1)(a) of the Constitution of the Republic of Singapore, resolves that a higher amount of One Thousand Five Hundred and Fifteen Billion Singapore Dollars (S$1,515,000,000,000) be specified for the purposes of Section 11(2) of the Government Securities (Debt Market and Investment) Act 1992.”

Background

2. Sir, section 11(1) of the Government Securities (Debt Market and Investment) Act 1992 (GSA) authorises the Minister for Finance to raise loans by the issue of Government securities and Treasury Bills (T-Bills) in Singapore.

3. Section 11(2) of the GSA places a limit on the aggregate amount that can be borrowed by the issue of Government securities and T-Bills. While the legislation already sets out that proceeds from such securities are not available for Government spending, this limit serves as an additional safeguard and as a check on the total stock of such borrowings. We monitor this limit closely, and when we assess that we need to raise the limit, we will seek Parliament’s authorisation to raise this through a resolution. 

4. The last increase to the issuance limit was in 2021, when Parliament authorised the increase of the Government’s issuance limit from S$690b to S$1,065b, which was intended to last till 2025.¹

5. As of end-October 2024, the outstanding amount of Government securities and T-Bills issued under the GSA is S$955b. The Government expects issuances to reach the prevailing limit in 2025.

Need to Increase Issuance of Government Securities and Treasury Bills under the GSA 

6. Sir, I propose to raise the ceiling for issuing Government securities and Treasury Bills under the GSA by S$450b. The proposed issuance limit of S$1,515b is intended to last till 2029. 

7. More than sixty percent of the increase is expected to be issued as Special Singapore Government Securities, or SSGS, with the primary purpose of meeting CPF’s investment needs. CPF monies are invested in SSGS, which are fully guaranteed by the Government. This provides the assurance that CPF Board will be able to pay the interest committed and monies due to CPF members. We expect CPF balances to continue increasing over the next five years due to growth in wages and CPF policy enhancements. Over the five years between 2018 and 2023, the median gross monthly income from employment grew by 3.2% per year. Examples of CPF policy enhancements include the higher CPF contribution rates for senior workers and CPF bonuses under the Majulah Package. These measures will enhance the retirement adequacy for our seniors, and also increase CPF’s investment needs in the coming years. These in turn will require more issuance of SSGS. 

8. The remaining increase in the issuance limit under the GSA is for projected issuances of publicly-held debt instruments, which are the Singapore Government Securities (Market Development), or SGS (MD), T-Bills, and Singapore Savings Bonds, or SSB. This is mainly to support the continued development of a vibrant SGS market, which serves as an anchor for the growth of the corporate and retail debt market; and meet demand for high quality liquid assets from our financial institutions in tandem with the growth of the financial sector. We will continue to monitor the market demand for such publicly-held debt instruments and will adjust the rate of issuance to meet this demand, if necessary.

Implication of the Increase in Issuance Limit

9. The proceeds from the issuance of Government securities and Treasury Bills under the GSA are invested, and are not used to fund Government spending. The Government does not borrow for recurrent spending needs, so as not to overly burden our future generations who will have to service the debt incurred by current and previous generations. 

10. Like previous increases, this increase in the issuance limit under the GSA is not for spending purposes and has no impact on the Government’s fiscal position. Unlike other countries that borrow primarily to fund recurrent spending, only a small portion of the Government’s borrowing is for spending purposes. This is issued under the Significant Infrastructure Government Loan Act (SINGA) to finance nationally significant infrastructure projects. SINGA borrowings are presently less than 2% of total Government borrowings. There are also strict safeguards on the qualifying projects and total amounts that can be borrowed. The SINGA has a separate issuance limit, which is not part of the issuance limit under the GSA.

11. The increase in the issuance limit under the GSA also has no impact on the Government’s net financial position. While Singapore’s gross debt-to-GDP ratio may appear large on its own, it does not fully reflect Singapore’s financial position as it does not consider Singapore’s assets, which continue to remain in excess of our debts. 
    
    Conclusion

12. For the present motion, I propose to raise the ceiling for issuing Government securities and Treasury Bills under the GSA to S$1,515b. The proposed limit is expected to last for five years till 2029.

13. Sir, I beg to move.

¹The Local Treasury Bills Act was merged into the Government Securities Act in November 2021. As a result, the issuance limits under both Acts were combined into a single limit of S$1,065 billion under the GSA.