Singapore Funds New Infrastructure

Singapore’s Deputy Prime Minister Heng Swee Keat announced that the government will issue new bonds amounting to $68 billion (S$90 billion) to finance major long-term infrastructure projects over the next 15 years, under a proposed law called the Significant Infrastructure Government Loan Act to be discussed in Parliament later this year.  The proceeds from the new bonds will be used for infrastructure investments with large upfront costs, including building new subway lines, pumping stations and tidal walls to protect Singapore against rising sea levels.  There are also plans to issue some green bonds for climate change related infrastructure.

During the 2019 budget discussions, Mr. Heng had shared that the government was looking to borrow in a way that spreads costs of infrastructure investments more equitably across generations. Borrowing to finance infrastructure is not new.  

The Singapore government borrowed in the 1970s and 1980s to finance an increase in development expenditure in building the country’s first subway lines, and Changi Airport Terminals. Strong GDP growth in the ensuing two decades resulted in buoyant operating surpluses which were used to fund development spending. The government is required by the Constitution to keep a balanced budget over each term of office. It does not borrow to fund recurrent spending, but to finance large-scale public infrastructure. Recurrent expenditures in areas such as healthcare, pre-school education and security are funded by recurrent revenues such as the goods and services tax (GST). 

Fore more information contact the U.S. Commercial Service at Office.Singapore@trade.gov.