it's a thunderstorm! what rainy day??

Govt may dip into reserves
By Jeremy Au Yong

'It's a difficult decision because once you do that, you may open the reserves for future demands, which may not justify the use of reserves,' he added. -- PHOTO: ZAOBAO
ONE of the country's sacred cows could be slaughtered during the Budget this Thursday, as the Government mulls over a move to dip into Singapore's rainy-day savings: the national reserves.

The leaders are now considering the unprecedented step of drawing from the reserves to fund the aggressive pain-relief measures needed in this downturn, Senior Minister Goh Chok Tong disclosed on Sunday.

'The issue which the Prime Minister and the Minister of Finance are now thinking over, is whether we should go to the President and ask him for approval to use the reserves for extraordinary measures,' he told reporters after giving out $100 hongbaos and goodies to the low income in his Marine Parade constituency.

But he also cautioned: 'It's a difficult decision because once you do that, you may open the reserves for future demands, which may not justify the use of reserves.''

On Friday, Prime Minister Lee Hsien Loong had said the Budget will run into a deficit this year and, if necessary, the Government will dig into the reserves.

He told reporters after a lunch with unionists: 'The Government's job is not to do everything which is asked for but to look to see which are the items which will be most effective and then how do I raise the money which I need to fund all the things which I need to do, either from the Budget revenues this year or from the reserves which we have accumulated."

A move to tap the sacrosanct reserves would be one more sign of how seriously the Government views the downturn.

Last year, it had already modified the rules to allow it to spend a larger chunk of the investment returns from the reserves.

But in 1999, in the aftermath of the Asian financial crisis, the Government had shied away from going to the reserves for funds, even in the face of a $5 billion Budget deficit. Mr Goh was the PM then.

Yesterday, however, he pointed out that a 'muscular response' in the upcoming Budget is needed as these are exceptional times - and the key issue is to save jobs.

'There must be exceptional measures for exceptional times,' he said.

He gave a sampling of the dire economic news coming in, noting the sharp dive in export figures last month. Singapore's exports plunged 21 per cent in December, the biggest fall in almost seven years.

'The weather is so bad, and we've always said the reserves are for a rainy day. If this is not a rainy day, I don't know what is a rainy day,' he said