Speech by Mr. Louis Ng Kok Kwang, MP for Nee Soon GRC, at the Second Reading of the Government Borrowing (Miscellaneous Amendments) Bill (Bill No. 32/2021)
Sir, I support this Bill, which will bring about greater clarity by consolidating and harmonising the government’s borrowing powers.
I have three points of clarification to make.
Merging of borrowing limits
My first point is on the merging of limits under the Government Securities Act and the Local Treasury Bills Act
The new section 11 of the Act will replace the separate borrowing limits for government securities and treasury bills with a single borrowing limit.
My concern is that we currently have a much higher borrowing limit for government securities than for treasury bills – more than nine times as much. The Government had its rationale for maintaining this disparity.
As such, I have three related questions.
One, what was the initial intent of having a much higher borrowing limit for Government Securities and Treasury Bills?
Does the Ministry see this initial intent as no longer relevant, given that this intent is no longer reflected in the combined borrowing limit?
Two, will this combined limit now result in a greater reliance on treasury bills compared to government securities?
Three, will the Government internally maintain a separate borrowing limit for Government Securities and Treasury Bills?
Approval required for increasing limits
My second point is on the approval required for borrowing beyond the $1.065 trillion limit.
Both the existing Section 11 and the new Section 11 allows the Government to borrow beyond its limit as long as there is a Parliamentary resolution and Presidential concurrence.
I would like to seek some clarifications on the approval process.
In both cases, all the Government needs is for Parliament to pass a resolution by simple majority and for the President to concur. The $1.06 trillion limit appears to make no difference.
Is the borrowing limit merely meant to signal the government’s stance on maximum borrowing?
Relatedly, will the Ministry consider introducing a strengthened check-and-balance for when the Government seeks to increase its borrowing limit or to borrow beyond the existing limit?
For example, we could require such activities to require a two-third vote of approval by Parliament in addition to the President’s concurrence.
This process change would reflect the sanctity of the borrowing limit and the severity of increasing or bypassing it.
Notwithstanding these clarifications, I stand in support of the Bill.
Watch the speech here.