Why do we grow our reserves?

Our reserves contribute directly to the annual Budget through the Net Investment Returns Contribution (NIRC) Framework. About 20% of annual Government spending is funded by the investment returns on our reserves. In addition, our reserves have played a crucial role in supporting Singaporeans through crises. For example, the Government drew on Past Reserves to support Singaporeans through the COVID-19 pandemic and the Global Financial Crisis.

While our reserves are growing, the size of our economy, the challenges facing our economy and complexity of our needs are growing even faster.

Returns on our investments are not guaranteed. They are subject to significant headwinds in the global investment environment – increasing geopolitical tensions, climate change, ageing populations, low productivity growth. We cannot choose at will when to slow down or increase the pace of returns.

Even at the current pace of accumulation, reserves growth will at best keep pace with economic growth.

While we cannot predict what the future holds, what crises we will run into and how much more we will need, keeping up our pace of saving will give us a safer and responsible buffer to meet future, growing needs and respond decisively in times of crises.

Understand more about the NIRC’s role in the annual Budget.

SM Lee Hsien Loong in a CNA interview shares the inside story of the reserves.

Learn more

In some ways, how Singapore manages the reserves is similar to how we manage our personal finances. Find out how in these content by The Woke Salaryman.

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