Bretton Woods Agreements (Amendment) Bill

Order for Second Reading read.

The Minister for National Development (Mr Lawrence Wong): Mdm Speaker, I beg to move, "That the Bill be now read a Second time."

Madam, in July 2009, the International Monetary Fund (IMF) agreed to boost its capacity to lend to low-income countries impacted by the global financial crisis, through a new Poverty Reduction and Growth Trust (PRGT). The PRGT is the IMF's concessional lending vehicle, which provides lending facilities tailored to the diverse needs of low-income countries. To fund the PRGT, IMF members agreed in 2012 to contribute at least 90% of distributed profits from the sales of gold holdings at the IMF.

As a highly open economy and international financial centre, Singapore has a strong stake in preserving a healthy global economic environment. This includes doing our part in the IMF's efforts to assist low-income countries. The PRGT will help support developing countries in Asia, such as Cambodia, Lao PDR, Myanmar and Vietnam, whom we share growing economic ties with.

The amendments to the Bretton Woods Agreements Act will allow MAS to participate in the PRGT through a US$20 million grant paid from Singapore's share of the IMF's gold sales profit. The grant is subject to Parliament's approval. Any future grant to the IMF will also require Parliament's approval.

Mdm Speaker, I will now go through the main amendments of the Bill.

Firstly, key provisions of setting out powers to provide financial assistance to the IMF, including loans, grants and interest-free deposits. MAS currently has powers to provide loans and interest-free deposits to the IMF under the MAS Act, but not grants. So, the Bill will empower MAS to make grants to the IMF, but only with Parliament's approval. The amendments will also consolidate MAS' existing powers to provide financial assistance to the IMF, including loans and interest-free deposits, into this single Act.

The second key provision is about setting out strong safeguards when providing financial assistance to the IMF. The Bill will add the following safeguards that apply when MAS provides any loans, grants or other financial assistance to the IMF.

First, any financial assistance can only be provided pursuant to a specific request from the IMF. In addition, MAS will provide financial assistance only as part of collective action among IMF members.

Second, in the interest of transparency, the Minister-in-charge of MAS must publish in the Gazette a statement containing key information about the financial assistance. This statement will contain a description of the nature and terms of the agreement to lend, give grants or other financial assistance, and the maximum amount that MAS has agreed to lend or give to the IMF. While MAS has in the past issued media statements and provided answers in Parliament on such assistance, such as in the case of MAS' contingent loan to the IMF in 2012, a Gazette notice, as required in this Bill, will provide further transparency.

Third, specifically in the case of a grant to be given by MAS to the IMF, the Bill provides that Parliament's approval by specific resolution is required. This is because grants are treated as expenses. This is unlike loans to IMF which are to be repaid at maturity and are recorded as assets in MAS' balance sheet. Loans to the IMF remain part of Singapore's Official Foreign Reserves, which are managed by MAS as the central bank.

Next, let me touch on some of the provisions for early repayment. Currently, agreements to provide loans to the IMF include a safeguard that obliges the IMF to immediately repay the loan in the event that Singapore has a balance of payments need.

The Bill will introduce a new safeguard for loans and other financial assistance provided to the IMF. Such agreements must include provisions for MAS to require early repayment in the event of suspension, or premature termination, of the IMF programme for which the assistance was provided.

Mdm Speaker, it is in Singapore's interest to continue to support the IMF as a global multilateral institution and its efforts to maintain a stable global financial system. The introduction of the Bretton Woods Agreements (Amendment) Bill will enable Singapore to support the IMF initiative to help low-income countries in times of crisis. Madam, I beg to move.

Question proposed.

4.30 pm

Mr Liang Eng Hwa (Holland-Bukit Timah): Mdm Speaker, the amendments to the Bretton Woods Agreements Act further set out the authority provided to MAS to enter into agreements with IMF and to empower MAS to carry out its obligations under the fund arrangement and fund programme established by IMF.

In particular, the proposed amendments to the Act will allow MAS to make grants and other financial assistances to IMF's concessional lending facility known as Poverty Reduction and Growth Trust (PRGT). The PRGT was set up primarily to lend to low-income countries who may be severely impacted by catastrophes, natural disasters, epidemics or global financial crises.

The amendments also instituted additional safeguards, such as requiring Parliament's approval for the provision of the grants and that the Minister-in-charge of MAS must also publish in the Gazette a statement containing details of the financial agreement.

I support the amendment to empower MAS, as well as the safeguards put in place over MAS' exercise of powers. From a humanitarian standpoint, I would also agree with the Government's position that we need to do our part and contribute our humble share to help poorer countries impacted by various calamities from time to time. It is also in our interest to see greater international cooperation in dealing with the various global challenges that we face and for the spirit of Bretton Woods to come to bear and continue. After all, we hope to live in a global village where the community of nations make efforts to help one another in need and each doing our part to alleviate poverty.

However, Mdm Speaker, I do have a few questions for the Minister.

I understand from the Minister's speech that the additional funds for the PRGT initiative is paid for from the profits arising from the IMF's sales of part of its gold holdings. The member states have agreed to this arrangement and Singapore's share of contribution to PRGT amounted to US$20 million. I would like to ask the Minister: do our gold holdings at IMF form part of our official foreign reserves and, hence, would the conversion of the sales profits from the disposal of our gold holdings into the financial grant to PRGT constitute a spending on reserves?

Secondly, I would like to ask the Minister whether he envisages the IMF requesting more contributions from member countries and, in particular, asking for bigger contributions from Singapore? This is against the backdrop of the growing trend of Western countries under political pressure to reduce their commitment to foreign aid. Would the PRGT be able to self-sustain its concessionary lending capacity over the long term with this latest contribution?

Thirdly, section 6A(2)(b) of the Bill states that MAS needs to be satisfied that at least one other government would be willing to provide the financial assistance in response to IMF's request before the grant or financial assistance can be given. I would like to ask the Minister whether that would be setting the bar too low with just one other government needing to consent to provide the financial assistance. What is the rationale and why would we not require more governments to participate before we assist, given that IMF is a multilateral participatory organisation? In this case, I understand that PRGT has already obtained support of more than 80% of the member countries.

Mdm Speaker, we live in an increasingly connected global neighbourhood where events or calamities that happen at one end of the globe could have impact and ramifications on other faraway locations, financial or otherwise.

As a highly open economy and international financial centre, it would also serve us well to support IMF's multilateral efforts to improve the livelihood of poorer countries, develop sustainable economic growth and preserve global financial stability. Mdm Speaker, with that, I support the amendments.

4.34 pm

Mr Saktiandi Supaat (Bishan-Toa Payoh): Mdm Speaker, as a small country, we are, indeed, fortunate to be able to withstand the onslaught of the many tremors that had previously rocked the world's financial system. We have seen how many bigger countries had faced economic crises because of their lack of prudence in safeguarding their reserves. This does not include such earthquakes in the financial market as the collapse of the subprime market in the US, the Eurozone debt crisis, the recent sharp decline in oil prices and other commodities. Governments need to carefully scrutinise their spending and to be honest when making hard decisions. The leaders must take the honourable step to be prepared to explain to the people on any difficult decisions rather than take the road of least resistance to win popularity.

Today, the IMF is called into play to help support or rescue governments for a variety of reasons. Across the globe, Angola is the latest to seek a bailout from the IMF that could be worth more than US$1.5 billion. This oil-producing OPEC member is seeking international help to cope with the fallout from low crude prices. Others, like Greece, are still struggling and tapping on IMF bailout funds.

Singapore, as a small nation, can take pride in being able to contribute to the IMF. We even hosted the 61st annual meetings of the IMF and the World Bank board of governors in 2006. Today, we are also the home for the IMF-Singapore Training Institute, serving as the regional training centre for the Asia-Pacific region on macroeconomic and financial management.

I am supportive of the amendment Bill, in particular, the new addition in section 6(a) with strong safeguards set out when providing the financial assistance, including loans and grants, to the IMF, for example, the arrangement that financial assistance will be given only if at least one other government has provided or intends to provide assistance in response to a similar request from the IMF. In the case of grants, additional safeguards were set out with the need for Parliament's approval. That is, powers to give grants to the IMF are subject to Parliament's approval, given the nature of grants as an expense and not an asset. This is an important additional safeguard.

However, while I support the amendment Bill, I would like to ask the Minister a few questions.

First, whether we should set a limit for the total financial assistance, including loans, grants and other forms of financial assistance, under section 6A, subsection (2)(c)(ii). And I feel we should put a limit based on a percentage of our current GDP or of our reserves, with a cap on a maximum, whichever is lower. One approach could be via 1% of GDP or about $4 billion, or 2% of reserves or around $5 billion, or on a per capita basis per Singapore citizen. This is on top of what is in subsection 2(d) which has already stated that Parliament will, by resolution, fix the maximum amount of grants to be given by MAS. This is because any loan or grant to the IMF under any agreement will be paid out of MAS' reserves. In addition, under subsection 2(c)(ii), the maximum amount that MAS agrees to lend or to give by way of grants or other financial assistance, will the methodology behind the calculation to derive that maximum amount be made public?

Second, for the loan component in section 6(A) subsection (4), can the Minister also share with the House, if, for some reason, Singapore faces a balance of payment crisis – as the Minister have mentioned earlier – and we are in need of the fund, what is the minimum timeframe required to notify them of our need for earlier repayments?

Third, for accountability and transparency, under subsection 2(c), in conjunction with the Minister's published Gazette, will MAS publish the statement on the maximum amount of financial assistance in the local media on the key information about the agreement to extend financial assistance so that the public can scrutinise it, and to publish it before Parliament debates the issue?

I think what is important is for all governments to work together to find a way to strengthen and maintain global financial stability. Our participation via IMF would, in some ways, be contributing to bringing stability to the recipient country or countries. Otherwise, a country which is trying to rebuild its economy would find its efforts scuppered by crisis in another country.

In Singapore, we have been enjoying financial stability though we are occasionally tested by outside events. Stability also means we need to continually ensure that our citizens are able to take some of the jabs without suffering a knock-out. Indeed, our main defensive block is our reserves. So, we must ensure we have sufficient safeguards with regard to any matter that affects our official or MAS' reserves, no matter how small.

Our second defensive block is our sound fiscal position and prudent yet progressively smart financial regulatory policies. Our policies have shored up our banks and financial system and we need to continually keep up with the changes in the market environment. Our de facto central bank, MAS, has done well to mitigate any sharp rise in market volatility and has ensured the appropriate monetary conditions for the economy to grow sustainably. I hope that as we participate to ensure global financial stability, we continue to ensure our own defensive blocks are not marginally eroded. Mdm Speaker, I support the amendment Bill.

4.40 pm

Er Dr Lee Bee Wah (Nee Soon): Mdm Speaker, the world economy is moving into a patch that has never before been seen. Who would have thought that oil prices, for example, could spiral down from above US$100 to just a quarter of its previous price? Many governments are caught in this sinkhole and would be at wits end how to re-write the budgets for the projects that are already launched and are work-in-progress.

The recent Brexit has added more uncertainties and chaos to the world economy. Instead, Singapore is in a happy position for it is able to participate and contribute to the IMF financial assistance scheme to help bail out others who are less fortunate. We would have read in the media of countries where the people see their savings eroded almost overnight.

We would have read of people who desperately rushed to queue for hours outside the banks and at ATMs to withdraw whatever was left in their account. Indeed, we would have read of how families suffered because of job losses due to the collapse in their country's economy. The bailout terms would require the borrowing governments to make painful cuts in expenditures, resulting in job losses. Hence, those whose jobs were affected would take to the streets and protest. These are all very frightening scenarios which happened in other countries. Thankfully, we do not see this in Singapore.

Today, we are in a more fortunate situation where we are among the members of the IMF who are able to make contributions to offer loans and grants to others. We had benefited from the World Bank funding our projects in the past. Going forward, what is important for us now is to examine how do we keep a lookout for any headwinds that may be heading towards us.

What can we do to further strengthen our fiscal policy to ensure that we can get an early warning in place and steer away from the storm?

I note that the amendment Bill covers public accountability and transparency when we are making any loans or grants to the IMF. The Government will publish the key information in the Gazette and, if I could ask, would this suffice, especially as not many people would read the Gazette? Or should this information sharing be published in the main local media so that everyone knows under what terms the loans or assistance are given? This way, it would thwart any attempt for mischievous rumour-mongering to make its way around the new media platforms.

Is there a special committee in MAS that will be making the decision on whether or not Singapore is to offer the loans or grants? What is the process before the proposal is tabled before Parliament?

And how much lead time will Members of Parliament have to study the proposal before it is tabled for the House to approve? Mdm Speaker, I support the Bill.

4.44 pm

Mr Murali Pillai (Bukit Batok): Mdm Speaker, the Bretton Woods Agreements Act, when enacted in 1966, enabled us to become a member of the IMF and the International Bank for Reconstruction and Development, also known as the World Bank.

As a country, we have benefited from our membership in the institutions, especially in our early years as a developing nation. As mentioned by the hon Member Er Dr Lee Bee Wah, Singapore received loans from the World Bank – about 14 loans between 1963 and 1975 – to develop our sewage, water, power and telecommunications infrastructure.

Now, it is right for us to do our part to support the IMF in its effort to provide assistance to the development of low-income member countries (LICs), particularly under the IMF's Poverty Reduction and Growth Trust (PRGT). We live in an increasingly complex world, interconnected and interdependent, where no one country is really immune from developments in another. In this regard, I quote the President of the World Bank Group, Mr Jim Yong Kim, in a speech he delivered on 5 April 2016:

"It has never been so painfully clear that the world is deeply interconnected. Major issues that evolve in a developing country now swiftly move to affect developed countries – and vice versa – more than ever before. Climate change, pandemics, refugees, terrorism and economic downturns all move seamlessly around the world."

The above-mentioned impact applies all the more to an open economy like Singapore.

The Bretton Woods Agreements (Amendment) Bill proposes amendments to the Act to allow MAS to lend or give grants or to provide other financial assistance to the IMF to support its programmes. I support the amendments proposed in the Bill.

While the intentions and motivations are commendable, given that this involves matters of our country's finances, I would like to highlight four areas of concern in respect of the applicable safeguards.

First, the proposed new section 6A of the Bill requires that the MAS be satisfied that at least one other government has provided or intends to provide financial assistance in response to a similar request from the IMF to provide financial assistance. The hon Member Mr Liang feels that this is setting the bar too low. However, in the explanatory brief issued by MAS on 9 May 2016, MAS said that it would only agree to a request for financial assistance where there is a collective and broad-based response amongst IMF members. I would like to ask the Minister why the stance taken by MAS appears to be rather more stringent than what is reflected in the wording of section 6A?

Second, the Explanatory Statement to the Bill states that any loan or grant to the IMF will be paid out of MAS' reserves. Loans are treated as monetary assets and are recorded as such in MAS' books. In contrast, grants are treated as expenses. For this reason, the proposed new section 6A(d) specifically requires Parliamentary approval on the quantum of the grant before a grant may be given. I agree that the Parliamentary safeguard is necessary.

However, we have another safeguard in the form of the Elected President. Article 22B(6) and (7) of the Constitution requires the MAS and its CEO to inform the President of any proposed transaction of the MAS which is likely to draw on MAS' reserves and, the President, acting in his discretion, may disapprove the proposed transaction. Could the Minister please clarify whether this constitutional safeguard would apply to a loan or grant given to the IMF, given that it will be paid out of MAS' reserves? If so, in the context of grants, would MAS be expected to engage the President before or after Parliament is asked to provide approval?

Third, where loans to the IMF are concerned, have we considered the possibility that such loans may not be repaid at maturity and may eventually be written-off? I highlight this, in particular, as the wording of the proposed section 6A of the Act contemplates that the financial assistance requested by the IMF may be provided directly to a recipient country. This approach of providing assistance directly to the recipient country is also contemplated in other legislatures, such as the Australian legislature. If so, Singapore would be taking on the direct credit risk of the recipient country and not the credit risk of the IMF. As such, if there is a loan default situation, what would be the treatment of the decision to write-off such loans? Would it be treated as an expenditure of MAS' reserves? Would a write-off require Parliamentary and Presidential approval under the proposed Bill or the Constitution?

Fourth, I have a concern relating to the phrase "other financial assistance" in the proposed section 6A of the Act. Section 8C of the Australian International Monetary Agreements Act is similar to our section 6A in that it allows Australia to provide assistance to another country in support of a fund programme. The Australian Act is restricted in the scope of financial assistance that may be provided as it only allows the Treasurer of Australia to enter into an agreement to lend money or to enter into a currency swap. No other financial assistance in contemplated.

In our proposed section 6A, the wording is wider. Could the Minister please clarify, besides interest-free deposits which have been identified by the MAS in its explanatory brief, what other types of financial assistance are contemplated and will they likely be also drawn from MAS' reserves? In particular, does section 6A contemplate the giving of guarantees? If so, does this not engage Article 144(1) of the Constitution, such that the President's concurrence is required before the guarantee may be given?

While I appreciate the need to maintain some flexibility as to the form of financial assistance to be provided, given that we have safeguards in the Constitution and the proposed Bill that would engage either or both the President and Parliament, would it not be better for the Bill to specify the types of financial assistance that may be given?

In conclusion, it is right for Singapore to do her part in assisting other developing nations, just like she once benefited from such assistance. However, we must also balance providing financial assistance with exercising prudence when spending our reserves. Mdm Speaker, notwithstanding my request for the Government to review and clarify the safeguards, I support the Bill.

4.51 pm

Mr Louis Ng Kok Kwang (Nee Soon): Mdm Speaker, I stand in full support of this Bill, a Bill that is about the spirit of sharing and giving.

The proposed amendments will provide MAS with additional powers to make grants, in order to enable MAS to participate in the IMF's initiative to strengthen the Poverty Reduction and Growth Trust (PRGT) resources.

These amendments will result in more financial assistance for lower income member countries. For a start, as the Minister mentioned, Singapore will be able to contribute our share of the IMF's gold sales profit, which will amount to a grant of US$20 million to the PRGT.

This proposal for the contribution of the above sales profit is supported by 80% of IMF members and this is a timely move for Singapore to support this as well, in direct response to repeated calls by the IMF for the world to act together, urgently.

In April this year, IMF chief, Christine Lagarde, warned that time was running out to revive the global economy. A few months before that, a report to G20 leaders called for strong policy responses at the national and multilateral levels to propel the global economy to a more prosperous path.

It does not take an economist to realise that we are entering into a changing economic climate. The global economy is facing latent fissures in the form of falling oil prices and China's slowdown.

Amid these economic threats, global powers are also struggling to cope with the refugee crisis, religious extremism and political unrest. We know that the IMF – as the global crisis lender – is not optimistic. After careful observations of global trends, they have cut their global growth forecast for the fourth time this year.

The amendments allowing for increased contributions to the IMF will allow it to fight fires in the global economy. Crisis prevention is an international effort, and Singapore must act, contribute and help. A strong Singaporean response in a time like this can only signal our resolve to maintain global stability, placing Singapore at the forefront and as a leader.

This act of global goodwill will also bode us well. For a trade-reliant country like ours, a stable and healthy global economy will only serve our interests. By contributing to IMF's war chest and bolstering emergency funds for weaker economies, we are, ultimately, building a firewall for ourselves. In these times of uncertainty, we must do all we can to ensure the global economic climate remains favourable to Singapore.

But this is not just about the Singapore economy, Singapore's interest and dollars and cents. It is also about showing that, despite being a tiny red dot, we can be a shining example of a small country with a big impact, a small country of responsible global citizens and we can be a shining red dot.

For me, this really is about sharing and giving – the lessons we teach our children in schools and the lessons I am currently teaching my daughter. When she is playing with other children and they want to play with the toy she is playing with, I tell her to share. Let others also have a chance to play. I am also teaching her to give and donate. I started passing her coins to put into donation tins in shops and explain to her why she is putting the coins in the tins.

But I am afraid this has been a failed experiment so far. I doubt she understands why. But she does enjoy putting the coins in the tins and she now insists on putting coins in every donation tin we walk past. I mentioned previously that she has learnt to say the word "no", but I am afraid I have not learnt to say the word "no" to her, especially when she has now learnt the words, "Daddy, please".

But I am sure she will eventually understand why she is putting coins in tins. Perhaps, the best way to teach is to show by example. As parents, we need to show that we share and we give. As a Government, we need to lead by example and show that we not just teach sharing and giving in our schools but that we practise what we preach.

Mdm Speaker, I applaud the Government for this initiative to strengthen our spirit of sharing and giving at an international level and I stand in full support of this Bill.

4.55 pm

Mr Lawrence Wong: Mdm Speaker, I thank the Members, Mr Liang Eng Hwa, Mr Saktiandi Supaat, Er Dr Lee Bee Wah, Mr Murali Pillai and Mr Louis Ng, all of whom have spoken and given their support for the Bill.

While the Members have highlighted the continued relevance of the IMF in maintaining a stable global financial and economic environment and the importance for Singapore to do our part in the IMF's multilateral efforts to assist low-income countries, they have also raised a number of issues and I will address them in turn.

First, Mr Liang asked if the grant to the IMF's PRGT will constitute an expense on our official foreign reserves. Madam, I would like to clarify that the gold holdings in the IMF belong to the IMF. It is not Singapore's gold or members' gold. It is the IMF's gold holdings. And when the IMF sold its gold to raise funds for the PRGT, the proceeds arising from the gold sales were distributed to members in proportion to their quota shares, provided members agreed to contribute the proceeds as grants to the PRGT.

So, the proceeds from the gold sales in 2012 and 2013, due to MAS, were recorded as income in the IMF's books temporarily and would be exactly offset when MAS makes the grant to PRGT. The net effect of this is that this entire transaction – income and outflow of grants – will not affect our overall level of official foreign reserves.

As countries around the world face increased risks of economic and financial disruptions arising from a broad range of factors, the IMF will review its financial assistance toolkit from time to time to see how it can assist countries. Where new initiatives are proposed, we will consider contributing to such initiatives where relevant and as part of a multi-lateral effort. As I have said earlier, any future grant will also similarly be subject to Parliament's approval. So, that is on the first point about the transaction mechanism, and whether it has an impact on our official foreign reserves.

Second, Mr Liang also asked whether PRGT will be self-sustaining and if we expect more requests from member countries by IMF. Self-sustainability is, indeed, one of the key considerations for the PRGT fundraising initiatives. The pledges made by IMF members so far have increased the PRGT's annual lending capacity from US$1 billion to US$1.75 billion. The IMF estimates that these additional resources will be able to sustain the PRGT lending for two decades. So, that is an estimate that the IMF has already made to ensure that the PRGT is on a sound, sustainable financial footing.

Next, Mr Liang and Mr Murali asked about the rationale behind section 6A(2b) of the Bill which requires that MAS be satisfied that at least one other government has provided or intends to provide financial assistance in response to the IMF request, before MAS can agree to such requests.

Madam, I would like to clarify that this section was incorporated to preclude Singapore from making grants to the IMF purely on our own. Thus, the key phrase is "at least one other government" but, in practice, I would like to assure Members that MAS will carefully assess any IMF requests for financial assistance on a case-by-case basis and we will participate only where it is in our interest to do so and only as part of a multilateral effort.

And as Mr Liang highlighted, IMF has acted with about 80% of IMF members, which is more than 140 countries, pledging grants with the PRGT from members' shares of the IMF's gold sales proceeds.

Next, Mr Murali also asked if Article 22B(6) and (7) of the Constitution – basically, the Constitutional safeguards on the reserves – would apply to any of the financial assistance to the IMF. I would like to clarify that Article 22B(6) of the Constitution refers to transactions which are likely to draw on the reserves accumulated by a Statutory Board prior to the current term of office of the Government. And, indeed, as with any such proposed transaction, including any financial assistance to the IMF, the President would be informed if MAS has to draw on past reserves.

If Article 22B(6) of the Constitution is engaged because a grant is likely to draw on past reserves, then MAS will inform the President before going to Parliament to obtain a resolution. But in this context, I would like to reassure Members that we do not expect any financial assistance to the IMF to require funding from past reserves. So, we do not expect any financial assistance to IMF to have to be funded from past reserves as MAS is most unlikely to participate in any scheme should this arise.

Mr Murali also asked about the possibility that loans with the IMF may not be repaid. I would like to clarify, first of all, that section 6A of the Bill does not, in fact, allow Singapore to provide financial assistance directly to a country borrowing from the IMF. When we provide a loan in support of an IMF programme for the benefit of one or more countries, we are providing the loan to the IMF and entering into an agreement with the IMF. We are taking on the credit risk of the IMF rather than the direct credit risk of the countries that the IMF lends to. This is similar to the low risk that is associated with the MAS' subscriptions to the capital of the IMF. As the IMF enjoys preferred creditor status, loans granted by the IMF must be repaid ahead of all other creditors. The IMF, with the advantage it has from its preferred creditor status and sizeable reserves that it can use to protect its members, has always repaid its own creditors.

Mr Murali also raised the question about what forms of other financial assistance MAS would make under the Bill and whether this includes the giving of guarantees and if the Bill should specify the types of financial assistance that can be given.

Madam, the amendments in the Bill will allow MAS to make grants to the IMF and consolidate existing powers to provide loans and interest-free deposits to the IMF. We expect these to be the main forms of assistance that MAS would give to the IMF in the foreseeable future. We have not been approached to give a guarantee to the IMF nor do we expect to do so. I think the Member highlighted Article 144 of the Constitution stating that "no guarantee or loan should be given or raised by the Government unless the President concurs". Article 144 does not apply to loans raised or guarantees given by a person other than the Government. And MAS is a separate vehicle from the Government. As such, Article 144 of the Constitution will not be engaged. Nevertheless, I should reiterate that MAS has not had to assist the IMF in the past by giving a guarantee; we have never had to do that and we do not expect to do so.

Mr Saktiandi Supaat asked if a limit should be set over the total financial assistance that can be provided to the IMF and whether there should be some form of methodology to derive this total amount that is stipulated in our various agreements with the IMF.

I want to emphasise that the MAS considers each IMF request for financial assistance carefully and exercises a high degree of prudence on whether or not to contribute. It may not be so practical to set the limit, given that there will be times of crisis when we think we should do our part to contribute to IMF resourcing initiatives. And, indeed, this was the case in 2012, when we provided a contingent loan to the IMF at the time of heightened global risk. In fact, I think I should also elaborate that, as I have said earlier in my opening speech, it is in Singapore's interest to do our part to contribute to a stable global financial and economic environment because of our role as a financial hub. So, it is, in fact, not just an obligation but it is also in our interest to make a contribution to ensure a stable economic and financial environment which we, in turn, will benefit from.

I should also explain that each member of the IMF is assigned a quota based broadly on its relative size in the world economy, including GDP, openness of its economy and its international reserves. This quota determines a member's voting power and it is also used as a benchmark for the IMF to apportion potential financial assistance to the IMF. So, this is already in place. For instance, the IMF distributed gold sale proceeds to members in proportion to their quotas to be re-contributed to the PRGT, as I have explained earlier.

Singapore's current quota share is about 0.82% of total IMF quotas and this remains a useful benchmark for deriving the financial assistance we provide to the IMF on a case-by-case basis.

Finally, Er Dr Lee Bee Wah and Mr Saktiandi Supaat also asked about publication and whether we should go beyond the publication of the Gazette to a broader statement to inform the public and I agree that we should do so. It is precisely for accountability and transparency that we want to make sure that the publication is made not just in a Gazette but to ensure that members of the public are informed of what we are doing and there can be a robust debate to Parliament, if need be.

Finally, Mr Saktiandi Supaat asked how much advance notice the IMF needs to repay Singapore's loans to the IMF in the event that we face a balance of payment crisis. Under MAS' existing agreement with the IMF, the IMF is obliged to immediately and fully repay the loan upon request. So, it is obliged to repay immediately and fully. In the event that such a scenario arises, where we have a balance of payments need, that is the obligation of the IMF to repay immediately and fully. The IMF has set aside more than US$120 billion, as a buffer, to ensure its ability to repay creditors early, if and when such an emergency emerges.

Madam, I believe I have addressed queries from the Members. I thank Members once again for their interest and for their support of the Bill.

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 Lawrence Wong].

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