Halimah briefed on Government’s expected investment returns
Projections will be used to see how much of past reserves can be tapped for next Budget
President Halimah Yacob has been briefed by Deputy Prime Minister Heng Swee Keat and officials from the Ministry of Finance (MOF) on the Government's proposed expected long-term real returns on its assets.
These projections will be used to determine how much of the nation's past reserves can be tapped for the next Budget.
In a Facebook post yesterday, Madam Halimah said the Council of Presidential Advisers (CPA) also attended the meeting last week.
Representatives from GIC, the Monetary Authority of Singapore (MAS) and Temasek were present to share their views on the long-term market outlook, she said.
Under the framework, the Government is allowed to take into the Budget up to 50 per cent of the expected long-term real returns on net assets invested by GIC, MAS and Temasek, after deducting liabilities such as government bonds.
This ensures that any tapping of the reserves will be done in a sustainable manner, to provide future governments with a steady stream of returns to support the Budget, MOF said on its website.
Among the three investment entities, the Government's assets are mainly managed by GIC, a professional fund management organisation that MOF describes as a "fairly conservative investor" in mainly public markets and, to a small extent, alternative investments such as private equity and real estate.
The Government also places deposits with MAS, Singapore's central bank, which holds its own assets as a statutory board on its balance sheet. A significant proportion of the MAS portfolio is invested in liquid financial market instruments.
The Government is also the sole equity shareholder of Temasek Holdings, an investment company managed on commercial principles to create and deliver sustainable long-term value.
Before the start of each financial year, the expected long-term real rates of return are proposed by the boards of GIC, MAS and Temasek.
The MOF reviews the methodologies used to propose the rates and proposes the expected long-term real rates of return to be applied to the net assets invested by the three agencies.
The President will consult with the CPA before she decides whether to agree with the Government's proposal.
Yesterday, Madam Halimah said she and the CPA had "good discussions" with MOF as well as GIC, MAS and Temasek on macroeconomic issues and the basis on which the expected returns were derived.
"I will review the Government's proposal in consultation with the CPA," she added.
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