SINGAPORE: A new bill was presented to Parliament on Monday (October 4) to consolidate legislation on government borrowing for investment and market development.
Introduced for first reading in Parliament by Minister of Finance Lawrence Wong, the Public Loans (Miscellaneous Amendments) Bill seeks to merge the Local Treasury Bills Act (LTBA) into the Government Securities Act (GSA).
The changes introduced by the bill are “administrative in nature without changing the substance of individual laws,” the Ministry of Finance (MOF) said in a backgrounder.
Consolidation is proposed in such a way as to “clearly separate” existing borrowing for purposes other than spending from new borrowing taken out for the financing of major and long-term infrastructure projects under the Government Infrastructure Loans Act. Significant (SINGA) recently introduced.
Passed by parliament in May, SINGA allows the government to borrow up to S $ 90 billion for “infrastructure of national importance”, such as new MRT lines.
The finance ministry, in its fact sheet released on Monday, described the LTBA and GSA as the main laws governing government borrowing activities.
The first was enacted in 1923 and authorizes the issuance of treasury bills to develop the domestic market for short-term debt.
The latter was enacted in 1992 and authorizes the issuance of government securities, such as Singapore government securities, to develop the debt market and meet the investment needs of the Central Provident Fund.
The LTBA and GSA provide separate borrowing limits of S $ 105 billion for treasury bills and S $ 960 billion for government securities, respectively.
These LTBA and GSA borrowings are not available for spending, the finance ministry said.
KEY FEATURES OF THE BILL
Under the bill, the LTBA will be merged with the GSA.
This will then be renamed the Law on Public Securities (Debt Market and Investment) to “emphasize that the proceeds of the loan are not intended to be spent,” said the Ministry of Finance.
The current borrowing limits under the LTBA and the GSA will also be combined to form a single borrowing limit of S $ 1.065 billion – no change from the existing overall borrowing limit.
“The outstanding securities issued under the existing GSA and LTBA will automatically be incorporated into the renowned Law on Government Securities (Debt Market and Investment) and there will be no impact on the existing characteristics of the securities” , the ministry said.
In addition, the borrowing provisions in other laws will be repealed as they “are no longer necessary”.
These are the Foreign Loans Law and the Treasury Deposit Receipts Law, as well as the borrowing provisions of the Development Investment Fund Law.
The Ministry of Finance said there are currently no loans outstanding under these laws, and the The government “does not foresee the need to borrow under these laws for expenses, investments or market development.”
“Going forward, the government will rely on the renowned Law on Government Securities (Debt Market and Investment) to borrow for purposes other than spending, and SINGA to borrow for major long-term infrastructure spending. term, “the finance ministry added.
“Borrowing for purposes other than spending will continue to constitute the majority of government borrowing. Singapore has no net debt because our assets far exceed our liabilities. “
Meanwhile, the bill will result in “consequential amendments” to the Constitution to rename existing references to the LTBA and GSA, and remove a reference to the repealed External Lending Act.
The amendments will be made through the Constitution of the Republic of Singapore (Amendment) Bill, which was introduced by the Department of Justice at the same parliamentary sitting on Monday.