• The transfers of OFR not needed by MAS to the Government (for longer-term investment by GIC) enabled by RMGS should have a positive impact on NIRC. This is because we are investing such foreign assets with GIC, which has a higher return-seeking portfolio, than that of MAS.
o Such transfers have been a longstanding practice. This was why GIC was set up in 1981.
• Nevertheless, long-term returns take time to materialise and we need to recognise that there are external factors beyond our control that could affect returns and NIRC.
o For example, global financial markets remain volatile and uncertain – investment returns are expected to face significant headwinds.
o There is no guarantee that the Net Investment Returns will always be increasing every year.
• We cannot just rely on reserves/NIRC for our growing needs.
o The Government’s budget is about 19% of Singapore’s GDP. Of which, 15 percentage-points are from taxes and fees, and the remaining 4 percentage-points are from NIRC.
o NIRC is currently already the largest single contributor to our revenues.
o Going forward, even with RMGS, we expect the contribution by NIRC to the budget to remain stable as a percentage of GDP.
• We will need additional revenue measures to meet increasing fiscal needs.