Singapore’s giant reserves: a taxing question for its next prime minister, Heng Swee Keat
- It’s budget season in the Lion City, which can only mean one thing: a debate over whether more of the revenue from Singapore’s giant reserves should be used to offset taxes
- The prime minister in waiting – Finance Minister Heng Swee Keat – is to unveil the budget on Monday
‘NIRC’ – it’s a uniquely Singaporean economic abbreviation that stands for net investment returns contribution.
It’s a mouthful, but in the coming weeks the term is likely to be on the lips of many of the Lion City’s lawmakers as they debate the national budget Finance Minister Heng Swee Keat will unveil on Monday. The NIRC is the amount of Singapore government revenue that comes from interest earned on its outsize reserves.
The city state has elaborate rules on how much a sitting government can rely on past reserves. Among them are requirements that the administration is not mired in net debt, and that only up to 50 per cent of long-term expected returns can be used each year.
The NIRC is computed based on long-term expected returns from net assets invested by three entities as well as investment income.
The total size of Singapore’s total reserves is a state secret, but estimates by most analysts put it at well above S$500 billion (US$370 billion).
The NIRC’s status as a bulwark of government revenue is well known in policymaking circles.