Singapore’s reserves in spotlight as PM Lee Hsien Loong makes rare comments about ‘nest egg’ ahead of presidential poll

The government’s decision to be more transparent about the reserves could indicate it hopes voters pick the person best suited to act as the reserves’ steward, analysts say

Both Tharman Shanmugaratnam and Ng Kok Song advocate for a cautious approach to the reserves, but Tan Kin Lian has questioned if the government has been ‘saving too much’

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The Presidential chair, flanked by the Singapore flag (left) and the Presidential Standard (right) at the Istana. Photo: SPH Media via AFP

Published: 9:30am, 27 Aug 2023

Since the starting pistol for Singapore’s September 1 presidential race went off, much of the news surrounding the three men vying for the job has centred on their messages of being independent, non-partisan and a check on government.

Yet the biggest issue they have to grapple with if they are elected president is the city state’s vast financial reserves.

Painstakingly accrued since the days of the late founding prime minister Lee Kuan Yew’s time in power, the city state is currently believed to have well over S$1 trillion (US$737.5 billion) in reserves, with the actual amount a state secret.

(From left) Singapore presidential candidates Tan Kin Lian, Tharman Shanmugaratnam and Ng Kok Song. Photo: SCMP Composite

A portion of up to half of the annual returns from the sum, known as the net investment returns contribution (NIRC), constitutes the second-biggest contributor to the government budget. The principal sum, meanwhile, gives the republic substantial financial firepower in times of crisis – such as during the Covid-19 pandemic – without needing to borrow funds.

When and how much of the reserves can be unlocked is within the purview of the president, in agreement with a Council of Presidential Advisers.

Observers say this system, operational since 1991, is reflective of the ruling People’s Action Party’s (PAP) anxiety that the reserves could be “raided” for short-term gain if a populist government were to take power in a freak election.

As Singapore heads to next week’s vote – its first contested presidential election in over a decade – Prime Minister Lee Hsien Loong and other high-level officials have given the public a rare, in-depth look at how the reserves are managed, what they are made up of and why their value must be kept a secret in a series of interviews.