Bretton Woods Agreements (Amendment) Bill

Mr Deputy Speaker: The Prime Minister.

6.45 pm

The Minister of State for Trade and Industry (Mr Alvin Tan) (for the Prime Minister): Mr Deputy Speaker, on behalf of Mr Tharman Shanmugaratnam, Senior Minister and Minister-in-Charge of the Monetary Authority of Singapore (MAS), I beg to move, "That the Bill be now read a Second time".

Sir, the International Monetary Fund, or IMF for short, is a global multilateral institution with a mission to achieve sustainable growth and prosperity for its 190-member countries. It supports economic policies that promote domestic and global financial stability and foster the economic well-being of countries. The IMF performs three main roles in furtherance of its mission: first, economic surveillance; second, lending to member countries; and third, capacity development.

The IMF depends on its members to provide the necessary financial resources to carry out its mission. The primary and permanent source of the IMF's funds is members' quotas. This refers to each member's capital subscription in the IMF that is broadly based on the member's relative position in the global economy. Quota resources are supplemented by multilateral borrowing arrangements with member countries which are in a stronger financial position, such as the New Arrangements to Borrow (NAB) and Bilateral Borrowing Agreements (BBAs).

As a small, highly open economy, and a responsible member of the international community, it is in Singapore's interest to support the IMF's multilateral efforts to promote financial stability and strengthen the resilience of the global financial and monetary system. Under the Bretton Woods Agreements Act (BWAA), MAS is empowered to enter into agreements on behalf of the Government of Singapore to provide loans, grants or other financial assistance in support of IMF arrangements or programmes. This is subject to safeguards, set out in section 6A of the BWAA, that ensure the proper exercise of MAS' powers in relation to this.

Sir, I will now go through the two main amendments proposed in the Bill.

First, the Bill proposes amendments to clarify that the safeguards which relate to grants in sections 6A(2) and (3) of the BWAA are intended to apply to grants provided to help member countries under IMF arrangements or programmes. They are not intended to apply to grants provided to fund the IMF's offices in Singapore.

Second, the Bill proposes amendments to the early repayment requirement in section 6A(4) of the BWAA to take into account: one, the IMF's use of standard-form agreements, and that, two, some of its arrangements or programmes cannot be suspended or prematurely terminated.

I wish to emphasise that the proposed amendments remain consistent with, and do not detract from, the intent of the existing safeguards in section 6A, which is to ensure the proper exercise of MAS' powers in relation to the provision of loans, grants or other financial assistance to the IMF. Allow me to elaborate.

The first set of amendments relates to the safeguards in section 6A(2) and (3) of the BWAA. These safeguards apply when MAS enters into an agreement to provide a grant to the IMF to support IMF arrangements or programmes with member countries in need.

Under BWAA, MAS has provided various grants to the IMF for this purpose. For example, MAS provided three grants in 2021, as part of multilateral efforts to enhance the capacity of the IMF to assist member countries, including in response to the COVID-19 pandemic.

Separately, MAS, on behalf of the Government of Singapore, funds two IMF offices which we host in Singapore. The two offices are:

First, the IMF-Singapore Regional Training Institute, or IMF-STI, for short. This is the IMF's regional training centre for the Asia and Pacific Region. Its mission is to enhance the economic and policy-making capacity of countries in the region. MAS co-funds the IMF-STI with IMF, our Ministry of Foreign Affairs, as well as the Government of Japan.

Second, the IMF Resident Representative Office in Singapore, or IMF RRO, for short. This serves as a liaison office between IMF and Singapore and assists with the IMF's macroeconomic surveillance work in the region. MAS co-funds the IMF RRO with the IMF.

Grants provided to finance the IMF's offices in Singapore are different from grants provided to support IMF arrangements or programmes which assist member countries in need.

When Singapore contributes grants to the IMF to support its arrangements or programmes to assist member countries in need, we depend on the IMF management and Executive Board to ensure proper governance in the administration of the grants. It would, therefore, be prudent to subject such grants to additional safeguards in section 6A of BWAA. These safeguards include ensuring that:

One, any grant provided is pursuant to a specific request from the IMF;

Two, any grant is provided only as part of a multilateral effort by IMF members;

Three, there is transparency in the form of a Gazette notice covering the key information of the assistance; and

Four, Parliament approves grants by specific resolution.

In contrast, grants to finance the IMF's offices in Singapore support IMF's operations and functions in Singapore. The scope of this financing is clearly set out in memoranda of understanding entered into between the Government of Singapore and the IMF. MAS exercises oversight on the use of these funds. In addition, MAS' financing of the IMF offices in Singapore is currently subsumed under MAS' overall annual budget and approved on a consolidated basis by the President, in accordance with the budget approval process under the MAS Act of 1970.

The BWAA will, therefore, be amended to clarify that agreements to provide grants to finance the operations and functions of the IMF's offices in Singapore are not subject to the safeguards in sections 6A(2) and (3). To be clear, agreements to provide grants to support IMF arrangements or programmes to assist member countries that are in need will remain subject to the safeguards in sections 6A(2) and (3), including the requirement for Parliamentary approval.

The second set of amendments relates to section 6A(4) of the BWAA. These apply when MAS enters into an agreement to provide a loan or other financial assistance, excluding grants, to support an IMF arrangement or programme. Section 6A(4) requires that such agreements, include provisions that allow MAS to require early repayment in the event of suspension or premature termination of the IMF arrangement or programme for which the assistance was provided.

This early repayment requirement is in addition to existing provisions in MAS' loan agreements with the IMF, which oblige the IMF to immediately repay the loan in the event of a balance of payments need in Singapore. The intent of the early repayment requirement was to provide additional assurance that MAS would be able to recover its monies from the IMF, even if we have no balance of payments need.

In practice, however, the IMF is unable to accommodate requests from MAS to include this early repayment requirement in IMF arrangements or programmes which are multilateral in nature and use the IMF's standard-form agreements. The IMF is required to ensure uniformity and equity of treatment for all contributing members and cannot provide for early repayment to any one contributing member, short of a contributing member having a balance of payments need. IMF has also indicated that certain IMF arrangements or programmes cannot be suspended or prematurely terminated.

The Bill will, thus, amend the BWAA to waive the early repayment requirement in the instances where:

(a) the relevant agreement is in a standard form provided by IMF, which MAS cannot amend unilaterally; or

(b) the relevant agreement is for an IMF arrangement or programme which cannot be suspended or prematurely terminated.

I would like to emphasise that loans or other financial assistance granted to support IMF arrangements or programmes will continue to be subject to strong safeguards, including the safeguards in sections 6A(2) and (3). There are also further safeguards in relation to loans.

First, when Singapore provides a loan in support of the IMF arrangements or programmes, Singapore lends to the IMF and not directly to a member country in need. That is, Singapore's loan exposure is to IMF, not borrowing countries.

Second, the IMF enjoys preferred creditor status. This means that loans granted by the IMF will be repaid ahead of all other creditors.

Third, as I mentioned earlier, should Singapore have a balance of payments need, IMF is already obliged under our loan agreements to repay the loan to Singapore immediately.

Mr Deputy Speaker, Sir, in conclusion, as a small and open economy and as an international financial hub, Singapore benefits from global economic prosperity and financial stability. Amidst the uncertain global economic environment and rising geopolitical tensions, the IMF is a key pillar of the multilateral system that fosters cooperation and promotes shared interests in the international financial system. The proposed amendments will enable Singapore to contribute to the work and mission of the IMF as a responsible member of the international community, in a prudent manner that fulfils the intent of the BWAA and ensures the proper exercise of MAS' powers. Sir, I beg to move.

Question proposed.

Mr Deputy Speaker: Deputy Leader.

Debate resumed.

Mr Deputy Speaker: Mr Don Wee.

6.57 pm

Mr Don Wee (Chua Chu Kang): Mr Deputy Speaker, I declare that I am working with a Singaporean bank. I support the Bill, but I have a few points of clarification.

The Bretton Woods Agreement, signed in 1944, resulted in the creation of the IMF and the World Bank. While these institutions have played important roles in global economic stability and development, I feel that they face challenges in addressing the complex issue of climate change. Through our Government's fulfilment of our commitment to IMF, can Singapore influence IMF to prioritise climate change as a central component of its operations? This may include integrating climate considerations into their policies, lending practices and technical assistance programmes. As mentioned by Senior Minister Tharman on 8 June 2023, MAS aims to bring together philanthropies, multilateral development banks, development finance institutions and donor partners to channel blended finance at scale into transition and green infrastructure projects into the region. I hope MAS can invite IMF to come onboard as IMF also has the means to provide adequate financial support to emerging countries for climate mitigation and adaptation efforts.

IMF can play a role in facilitating this coordination by fostering dialogue and collaboration between developed and developing countries, as well as providing technical assistance in developing climate‐related policies. For example, IMF can broker more carbon credit cooperation between the developing countries and Singapore, so that there is a good range of carbon credits for our large carbon emitters to choose from in Singapore.

Although not directly related to this Bill, but since the Singapore Government funds the operations of IMF's offices in Singapore, can Singapore be given priority to support IMF's capacity‐building efforts in providing training, knowledge sharing and technical assistance on climate‐related topics to member countries? Can MAS and IMF jointly provide some form of "aircover" or support to the financial institutions in Singapore so that they will be incentivised to provide transition finance to the brown industries in the region? This will certainly boost Singapore's capacity as well as status as a green economy hub.

This is affirmed by a recent article published by the Massachusetts Institute of Technology Center for Energy and Environmental Policy Research, which states that many ASEAN countries face the challenge of reducing green house emissions while at the same time expanding energy supply to meet the needs of their rapidly developing economies.

Next, section 4 of the BWAA empowers MAS to subscribe to Singapore's quota share which is currently Special Drawing Rights (SDR) of 3.9 billion amounting to about US$5.5 billion. Is this a funded or unfunded commitment? If it is funded, what is the interest rate and can we sell the SDR back to IMF in the event Singapore needs funds urgently? Who does IMF borrow from currently? Where is Singapore in the repayment pecking order? I just want to make sure that Singapore's interest is not being compromised and agreements are entered into on a pari passu basis.

The agreement allows Singapore to provide a US$20 million grant to the Poverty Reduction and Growth Trust (PRGT) which provides loans to low‐income countries. I understand that there is no stipulated repayment date. So, does this mean that Singapore cannot take back the grant in the event Singapore has an emergency? If this is the case, why would Singapore want to provide such a grant? How does it benefit Singapore?

I appreciate that by supporting IMF, Singapore can also contribute to poverty reduction, improved infrastructure and increased access to clean energy in developing countries. This, in turn, can foster economic growth and stability, benefiting the global economy which Singapore is part of.

Mr Deputy Speaker: Assoc Prof Jamus Jerome Lim.

7.02 pm

Assoc Prof Jamus Jerome Lim (Sengkang): Mr Deputy Speaker, as in related Motions prior, I am aware that the stipulations in this Bill are essentially of a technical nature and are designed to help us better realise our existing commitments to the international financial system. Nevertheless, while I support the Bill, I have some comments, both on the specific contents of the Bill being considered, as well as one – on the use of SDRs – that is fully within the spirit of the Bill, but is not directly taken up by it.

Clause 3(a) of the Bill was included to preclude the use of grants for the funding of IMF offices hosted in Singapore. This sort of ring-fencing strikes me as eminently sensible, since we do not want the BWAA to inadvertently become a funnel for grants to the Fund via MAS without Parliamentary approval.

That said, it is curious to me why the amendment does not include or require associated changes to the International Development Association (IDA) Act, since IDA similarly provides grants, funded from subscriptions, even as the World Bank maintains offices here, too. If such language was already included in the most recent amendment to the IDA Act, tabled in October of last year, I was unable to find it. Perhaps the Minister of State may clarify as to why this allied amendment is unnecessary.

After all, a cursory examination of the website for the IMF-STI reveals just 16 staff members, compared to the World Bank's Singapore Infrastructure and Urban Hub, which is the largest operational office co-locating staff from the Bank, approximating some 200 or so professionals.

I will now move on to my main constructive suggestion, offered in the spirit of the Bill: about how we can better use SDRs for the purposes of foreign assistance.

In August 2021, IMF made a general SDR allocation to all member countries of IMF. The amount came up to 465 billion SDRs, or US$650 billion, the largest in the institution's history. It was meant to help countries get through the COVID-19 pandemic. To ensure the integrity of the process and to encourage donations, the Fund established two trusts: the PRGT and the Resilience and Sustainability Trust (RST), where countries with excess SDRs could make transfers into.

While not meant to be a substitute for actual foreign aid, reallocating SDRs to countries that have struggled with accessing financing after the COVID-19 crisis is very much meant to be complementary. Advanced economies already had an easier time tapping on financial resources as they rolled out their support packages, since many were able to easily issue debt at low cost in private markets. Yet, by dint of the SDR quota formula, developed countries received two-thirds the share of the total SDR injection, despite having a fifth of the population. The crunch was most acute for the least developed countries, since their SDR allocation only came up to 2.4% of the total.

The proposed amendments to the language of the Bill, specifically, clause 2, which replaces how the MAS is not just constrained to "buy or sell" SDRs alone, but also "otherwise deal with" them, explicitly opens the door for SDRs to also be reallocated.

To be clear, this Government has already taken some steps in the direction of offering grants, as well as doing so specifically with SDRs.

In January this year, the Government provided an additional subscription of up to $70 million to the World Bank's IDA, which offers grants to the world’s poorest countries. And two years ago, the Government proposed grants to three separate funds led by IMF, using SDRs.

For the latter grants, Minister Ong had moved that the grants of $17.6 million be made to the Catastrophe Containment and Relief Trust, $2 million to the COVID-19 Crisis Capacity Development Initiative, and $0.97 million to a special debt relief programme for Somalia. Together, these come up to a little less than $21 million dollars. Yet, for the 2021 general allocation, Singapore received 3.7 billion new SDRs, which works out to $2.8 billion dollars. Put another way, what we chose to reallocate was more than one hundred times less than the amount we received in new SDR allocations that year.

If we think we should be prudent with re-allocations, it is worth pointing out that the amounts we have transferred so far are only a fifth of the amounts we have already pledged – we offered a billion – and we only supported one of the two recommended trust funds, which is the RST.

To be clear, transferring our SDR allocations are not costless. While the allocations we received in 2021 were, indeed, cost-free, they did not require contributions from our fiscal budget, nor add to our debt burden – something that Minister of State Tan had mentioned – and they remain so only if they remain held as part of our foreign exchange reserves. Should we use our SDRs by exchanging it for hard currencies and giving the resulting amount away as a grant, or alternatively by directly transferring these SDRs to other needy nations, we will, indeed, incur net charges.

Still, transferring an amount less than 100 times our quota allocation does not strike me as, in the words of Minister Ong at that time, "commensurate with our size". After all, while it is true that our quota and voting rights at the Fund are determined by a formula, how much we offer of this as a contribution is limited only by our desire. If, indeed, we are, again in Minister Ong's words, "always struggling for relevance", I can think of more difficult ways than to demonstrate our presence, despite our size, via our generosity.

And this brings me back to a theme that I have repeatedly shared with this House: that the good faith delivery of foreign aid helps not just the countries that we support, but can also rebound back to us.

One of the magical benefits of development is that it is decidedly not a zero-sum game. So, when today's lower-income countries receive financial support that enables them to vault into the next stage of their development journey, their improved incomes are not coming at the expense of any other country necessarily falling behind. And when these countries become richer, they are more able to afford the sorts of higher value-added goods and services economies, such as our own, produce.

Moreover, the moral impetus to support other economies is also strong. Singapore's economy has largely recovered from COVID-19, but many others are still facing the repercussions of the shock and are reporting GDP figures below their pre-pandemic levels.

Given how timely such support will be, we can also garner an immense amount of intangible goodwill by becoming a more active provider of foreign aid. Such goodwill can be very valuable when we hope for support from other nations sometime in the future. As a small country, this sort of soft power can only be disproportionately obtained by building up a stock today, by being generous when others are needy.

Mr Deputy Speaker: Mr Saktiandi Supaat.

7.10 pm

Mr Saktiandi Supaat (Bishan-Toa Payoh): Mr Deputy Speaker, first, I would like to declare that I work in a foreign bank.

Mr Deputy Speaker, the BWAA enables Singapore to participate and perform its obligations as a member of the IMF and the World Bank.

The two organisations continue to play a key role in facilitating cooperation between more than 180 member countries to promote financial stability and monetary cooperation. Many would not know that Singapore officially joined the World Bank on 3 August 1966, shortly after Independence from Malaysia. As we started out as a developing nation, we benefited from no less than 14 loans from the World Bank between 1963 and 1975 to build our water, port, sewage, power and telecommunications infrastructure.

These loans were repaid by the mid-1980s and, today, Singapore is a developed country which is more likely to provide, rather than receive, assistance through the World Bank and IMF. We contribute not only because we should give back to the international community, but also because a prosperous and growing global economic environment is important to our open, trade-dependent economy.

Mr Deputy Speaker, this amendment Bill mainly makes changes to section 6A of the Act, which was introduced not too long ago in 2016. When we debated the addition of section 6A back in 2016, I noted the strong safeguards applicable for Singapore to provide loans, grants and other forms of financial assistance to IMF for its arrangements and programmes, including the need for Parliament's approval in the case of grants.

Since the introduction of section 6A, I would like to ask the Minister of State how many times has MAS agreed to provide financial assistance under that section? And what is the total value of such financial assistance, including loans and grants? In the 2016 debate, various Members, including myself, noted that not many Singaporeans would learn of the amounts of assistance we are providing to other countries by looking up the Gazette.

Turning to the present amendment Bill, what is the reason for removing the safeguards in relation to agreements to finance the operations and functions of IMF offices in Singapore? While I can see the rationale for disapplying sub-section (2)(b), which was "incorporated to preclude Singapore from making grants to the IMF purely on our own [and not alongside other countries]", why is the funding of IMF offices in Singapore excused from Parliamentary oversight of the maximum amount of grants that can be given by the MAS?

I understand that there are two such IMF offices in Singapore: the IMF-STI and the IMF RRO. I see value in them. I actually went for a few courses in the IMF-STI when I was in MAS – valuable training courses. But what is the function of each office going forward and how do they benefit Singapore?

How much has it cost the MAS to sustain the operations and functions of these offices in each of the last five years? As any grant to the IMF would be an expense that reduces the amount we accumulate in Singapore's Official Foreign Reserves (OFR), who would exercise oversight over the MAS' discretion if it is not Parliament? I also note that the Constitutional check by the Elected President would not apply where past reserves are not being touched.

Mr Deputy Speaker, this amendment Bill also introduces another carve-out. Whereas the Act currently provides that any loan agreement must provide the MAS with the right to require early repayment upon the suspension or premature termination of the IMF arrangement or programme, such a rule would not apply to a standard form agreement provided by the IMF, or if the IMF arrangement or programme cannot be suspended or prematurely terminated.

In relation to the first class of exempted agreements, I am concerned that this would cover the majority of instances where IMF requests Singapore to provide assistance in support of an IMF arrangement or programme for the benefit of one or more countries. Perhaps the Minister of State or Minister can share, based on the previous requests Singapore has received from the IMF, what percentage involved "standard form agreements" which cannot be unilaterally amended by MAS?

In relation to the second class of exempted agreements, I am curious what would be an example of an IMF arrangement or programme which cannot be suspended or prematurely terminated.

Mr Deputy Speaker, today, Singapore is indeed in a privileged position to be able to contribute to help lower-income countries in their development, as we had actually benefited from previously in the 1960s.

Even as we do that, we must stay true to our enduring quality of prudence in public spending. Every expense is an amount that could otherwise be accumulated into our official reserves, which we know are there to tide us through major crises like the recent COVID-19 pandemic and for many crises in the future.

Mr Deputy Speaker, notwithstanding the clarifications sought, I support the Bill.

Mr Deputy Speaker: Minister of State Alvin Tan.

7.15 pm

Mr Alvin Tan: Mr Deputy Speaker, Sir, I thank the Members, Mr Don Wee, Mr Saktiandi Supaat and Assoc Prof Jamus Lim, who have spoken in support of the Bill. I will first address Mr Don Wee's questions relating to the IMF's role in dealing with climate change.

In line with the IMF's mandate to promote global macroeconomic and financial stability, and recognising that climate change can pose a significant risk to members' economic well-being, the IMF has stepped up efforts to incorporate climate considerations and goals across its surveillance, lending and capacity development activities.

On surveillance, the IMF provides guidance to members on appropriate macroeconomic and fiscal policies that facilitate climate mitigation, adaptation and the transition to a low-carbon economy. The IMF incorporates climate risk analysis into its Financial Sector Assessment Programmes (FSAP) to assess the impact of climate change on the stability of members' financial sectors. The IMF has also developed tools to help governments identify and select good quality public investment projects for building low-carbon and climate-resilient infrastructure that can attract climate investments.

On lending, the IMF created a new lending facility, the Resilience and Sustainability Trust (RST), which Assoc Prof Lim talked about. They did so in April 2022 to provide affordable, long-term financing to low-income and vulnerable middle-income member countries in support of macro-economic policy reforms related to structural challenges, including climate change.

On the RST, the IMF has indeed requested for our contributions and the MAS is assessing the request.

The RST also aims to catalyse financing from other stakeholders for climate-related projects. So, I agree with Assoc Prof Jamus Lim on the need for Singapore to play our role including in the initiatives like the RST. Here also, the multilateral development banks (MDBs) such as the World Bank and the Asian Development Bank have crucial roles to play, as these institutions seek to crowd in private capital to close climate financing gaps, including by scaling up the use of blended finance. And MAS will continue to work closely with the IMF and the MDBs on climate financing initiatives in the region.

On capacity building, the IMF and its training institutes, including the IMF-STI conduct training courses centred on the macro-economic implications of climate change. These courses are targeted at policy makers from the region, including Singapore and our neighbours. As I mentioned earlier, MAS has been providing funding support and guidance for the STI on programmes that best meets members' capacity needs, including on the climate front.

Mr Don Wee, Mr Saktiandi Supaat and Assoc Prof Jamus Lim raised several questions on the different forms of financial support Singapore has provided to the IMF. I would like to thank all Members for the support of Singapore's continuing contributions to IMF's programmes and arrangements. Singapore will indeed continue to contribute to global efforts to bolster the IMF's resources and we will carefully assess the merits of future requests and Parliamentary approval will be sought.

But let me go into the different forms of financial support, even as we stand ready to assess each and every potential request.

First, on quotas. Singapore's quota subscription of SDR 3.9 billion in the IMF is a funded contribution. It is part of Singapore's OFR or official foreign reserves and earns interest based on the SDR interest rate. A quarter of the member's quota subscription is usually paid in SDRs or foreign currencies acceptable to the IMF, with the remainder paid in the member's own currency. The portion of Singapore's quota subscription that is paid in SDRs or foreign currency can be repaid to Singapore on demand to obtain reserve assets to meet our balance of payments financing needs, as and when that need arises.

Next, the IMF also relies on borrowed resources to support its lending activity. These currently arise, as I mentioned earlier, through the New Arrangements to Borrow (NAB) and the Bilateral Borrowing Agreements (BBAs). Since the BWAA was amended in 2016, Singapore has made loan commitments of US$1.9 billion to the IMF under the NAB for 2021 to 2025 and US$1.7 billion under the BBA for 2021 to 2024.

Only members with strong external positions such as Germany, Japan, Switzerland, the United States and Singapore are requested by the IMF to contribute to the NAB and the BBAs. The full list of contributors to both the NAB and the BBAs respectively are available on the IMF's website. For these loan arrangements, the IMF uses standard form agreements signed across all the contributors so that the same terms apply across all contributors and there is also parity of treatment.

Third, Singapore has also contributed grants as part of the IMF's multilateral initiatives. In November 2016, Singapore contributed a US$20 million grant to the Poverty Reduction and Growth Trust (PRGT) and US$0.3 million grant to the Catastrophe Containment and Relief Trust (CCRT). The CCRT provides debt relief for the IMF's poorest and most vulnerable members in the event of a global health pandemic or natural catastrophe.

More recently, to enhance the capacity of the IMF to assist vulnerable, low-income member countries to respond to the COVID-19 pandemic, the MAS provided three grants. First, an additional grant of US$17.6 million to the IMF's CCRT; second, a grant of US$2 million to the IMF's COVID-19 Crisis Capacity Development Initiative, which seeks to meet the urgent capacity development needs of countries affected by the COVID-19 pandemic; and three, a grant of US$0.97 million to the IMF's Trust for Special Poverty Reduction and Growth Operations for Heavily Indebted Poor Countries.

To ensure transparency and accountability, the MAS has issued media releases for each of these contributions on its website, in addition to publishing the information in the Government Gazette.

As Assoc Prof Jamus Lim mentioned, and also both Members Saktiandi Supaat and Don Wee, it is indeed in Singapore's interest to contribute grants to support the IMF's initiatives such as the PRGT to assist vulnerable, low-income countries, but also provided that the BWAA safeguards are complied with.

This was explained to this House in 2016 when the BWAA was last amended to empower MAS to contribute grants to the IMF. By contributing to such initiatives, Singapore joins other members of the global community in supporting the IMF's role to safeguard global monetary and financial stability, and foster sustainable growth and prosperity for its members and also to generate the goodwill that Members had mentioned. This will, in turn, not just generate goodwill but also benefit Singapore's economy and financial stability.

I will now turn to Members' questions on the specific amendments proposed.

First, let me cover questions relating to the amendment to exclude MAS' financing of IMF's operations in Singapore from the application of sections 6A(2) and 6A(3). The policy intent has always been, and continues to be, to apply the safeguards specific to both these sections only to grants provided to IMF to assist member countries under IMF arrangements or programmes. These grants are different from MAS' financing of the IMF offices in Singapore.

As I mentioned in my earlier Second Reading speech, when Singapore contributes grants to support international efforts including IMF arrangements or programmes to assist member countries in need, we do so alongside other country contributors. So, MAS cannot dictate terms because there are many other contributors to such arrangements or programmes. We thus have to rely on the IMF to ensure there is proper governance in the administration of the grants. Therefore, it would be prudent to subject such grants to additional domestic safeguards in sections 6A(2) and 6A(3) of the BWAA, including Parliamentary oversight, which the Member had mentioned earlier.

In contrast, the scope of MAS' financing for the IMF's offices and how it can be used are clearly stated in the respective memoranda of understanding (MOUs) between the IMF and Singapore. MAS exercises direct oversight on the use of the funds, and the IMF must meet MAS' reporting requirements.

Instead of Parliamentary oversight, MAS' funding of the IMF's operations in Singapore is subject to the approval of the President. MAS' funding of the IMF's offices in Singapore is drawn from MAS' overall budget, which requires the President's approval, pursuant to Article 22B of the Constitution read with section 166 of the MAS Act. Presidential approval is required in every financial year, even if past reserves are not used.

The proposed amendment then clarifies the distinction between such funding support for IMF offices in Singapore and grants to support international efforts. It is also in line with the current practice for other international organisations that establish offices in Singapore. The current practice does not explicitly require Parliament to fix by resolution the maximum amount of grants to be given under a specific grant agreement by agencies to support the operations of Singapore-based offices of other international organisations.

So, on the IDA question which the Member Assoc Prof Jamus Lim mentioned earlier, under the IDA Act, there is no requirement therefore for Parliament to approve grants made by the MOF to relevant international organisations' offices. And the issue covered in the present amendment here, therefore, does not arise in the case of the IDA Act.

In terms of the quantum of financing that has been provided to the IMF offices in Singapore. Between FY2019 and FY2022, MAS provided an average of about $2.3 million to the STI annually and about $390,000 to the RRO annually. Through their regional surveillance and capacity development activities, the IMF's Singapore offices strengthen Singapore's status as a regional financial hub.

Let me now turn to the amendment to waive the early repayment requirement in certain circumstances and, specifically, to answer Mr Saktiandi Supaat's question, the NAB as well as the BBAs are examples of IMF's multilateral loan arrangements which involve the use of standard form agreements. For the NAB, the IMF confirmed that an arrangement can be made to facilitate repayment of a member's NAB contribution should the need arise. In the case of the BBA, the IMF confirmed that the BBA cannot be suspended or prematurely terminated. Thus, the issue of early repayment did not arise.

The proposed amendment therefore provides clarity on the statutory requirements applicable to similar agreements for loans or financial assistance, based on our engagement with the IMF on both the NAB as well as the BBA.

Regardless, any such loans or financial assistance that is granted to IMF under the BWAA will continue to be subject to strong safeguards and the risk to Singapore's official foreign reserves from the absence of this early repayment option is very low.

Why? Well, first, when Singapore provides a loan in support of IMF arrangements or programmes, Singapore, as I mentioned earlier, lends to the IMF, not directly to member countries in need. Therefore, Singapore's loan exposure is to the IMF and not to the borrowing countries. Second, as the IMF enjoys preferred creditor status, loans granted by the IMF must be repaid ahead of all other creditors. Third, should Singapore have a balance of payments need, the IMF is obliged under our loan agreements to repay the loan to Singapore immediately. And finally, the IMF has an excellent repayment history and has never defaulted on repayments to its creditors.

I emphasise that where the IMF arrangement or programme can be prematurely terminated or suspended, and where the terms of any agreements for loans or financial assistance can be unilaterally amended, MAS will require the IMF to include an early repayment provision in accordance to the BWAA.

Finally, Mr Saktiandi Supaat spoke of the need to be prudent in public spending. I want to assure him and emphasise that the MAS will continue to exercise a high degree of prudence when considering each IMF request for financial assistance.

Sir, I believe I have addressed Members' queries. I thank Members once again for their interest in and support of the Bill. Sir, I beg to move.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. – [Mr Alvin Tan].

Bill considered in Committee; reported without amendment; read a Third time and passed.