Published February 2, 2009

Tapping reserves doesn't mean breaking piggy bank: SM Goh

The funds will only be used during exceptional crisis and not to support welfare

By CHEN HUIFEN

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(SINGAPORE) The government will dip into the country's reserves only in times of exceptional crisis - and will not use them to support welfare and other programmes, Senior Minister Goh Chok Tong said yesterday.

And tapping Singapore's reserves to help the country ride out the current economic crisis is not equivalent to breaking the piggy bank, he said.

'To break the piggy bank is to allow all the coins and notes to spill out, which means no control over the expenditure,' he explained. 'We did not break the piggy bank. We've asked permission for the president to use his second key for us to take a bit of the reserves out of the safe.'

Speaking at a Chinese New Year lunch at his Marine Parade constituency yesterday, Mr Goh gave the assurance that a stringent and disciplined process is involved before arriving at the decision to draw on Singapore's past reserves. The finance minister first had to convince the prime minister. They then had to convince the Cabinet. After that, the government had to convince the president and his Council of Presidential Advisers.

Mr Goh was commenting on the government's move last month to draw on $4.9 billion of its past reserves to fund a $20.5 billion Budget. He said that any decision to use the reserves should be underlined by three main principles, or what he called 'no' signs - there should be no use of the reserves to support social assistance; no draw for permanent programmes; and no draw except under dire circumstances when one-off extraordinary measures are required to ward off catastrophe.

Social assistance schemes and permanent programmes like Workfare and Comcare should be funded by current revenues or reserves. And when the recession is over, Singapore must continue to build up its surpluses, and 'never break the piggy bank'.

Likening the Singapore economy to a speedboat in an open sea, Mr Goh said that the speedboat would outrun the larger vessels when the weather is fine and the seas are calm. But when conditions turn nasty, the speedboat would have to slow down and seek refuge in the harbour.

And just like its crew members would prepare for the next race, Mr Goh urged Singaporeans to use the time wisely to upgrade themselves, go for retraining, and maintain a positive attitude. Banks should overcome their risk aversion and start lending, otherwise they could stifle economic enterprise.

Drawing on lessons learnt from past economic crises, he called for Singaporeans to remain united and resilient, to help one another, and not to feel demoralised by the current recession.

He said: 'In past recessions, no matter how difficult life was, we took the medicine. Workers and employers swallowed them - the bitter medicine prescribed by the government - and worked hand in hand with the government to tackle our common challenges. The whole population rallied behind the government to pull the economy out of recession.

'Likewise for this recession, we must confront our problems squarely, endure short-term pain and plan for the long term.'

The theme about finding strength in unity was reiterated by Prime Minister Lee Hsien Loong at another community event last night. Mr Lee said that Singapore will be able to ride on Asia's growth and Singaporeans should feel confident about their future.

This is because Singapore is different from other countries in the way it solves its problems and investors already know that. While it responds to the current crisis, it is also making plans to prepare for the future, so that 'when the storm clears, the clouds clear, and the sun comes on, we will be there and ready to sail'.

This may be seen in the Resilience Package in the Budget announced just before the Lunar New Year. Aside from Jobs Credit and business financing programmes to help companies stay afloat and keep workers employed, there are also investments for the future, such as in education, and public infrastructure.

But the community must also work together to reach out to those who are in greater need, Mr Lee said. The government will also give its support by providing VWOs and grassroots organisations with more resources.