Issuance of Government Bonds to Fund Mega Infrastructure Projects

36 Ms Sun Xueling asked the Minister for Finance whether the Ministry will consider issuing Government bonds or project level bonds to finance mega infrastructure projects like Changi Airport Terminal 5 and Tuas Mega Port.

Mr Heng Swee Keat: Bond financing by Statutory Boards and Government companies is one way to finance infrastructure projects. We already do this today. For example, Statutory Boards like the Housing Development Board, Land Transport Authority and Public Utilities Board have issued bonds to finance public housing, rail and water infrastructure.

Such borrowings enable the capital cost to be spread out over a longer period, thus better matching the cost with the benefits over the useful life of the asset. But we also need to consider interest costs and ensure that there are adequate future revenue streams from the project to service the debt.

For the major infrastructure projects that are upcoming, the Government will study the extent to which bond financing can be used, bearing in mind the key principle of ensuring fiscal sustainability.