'Singapore's Grants to the International Monetary Fund's Catastrophe Containment and Relief Trust' - First Motion Speech by Mr Ong Ye Kung, Minister for Transport, on behalf of[...]

Mr Deputy Speaker, on behalf of Senior Minister and Minister in Charge of the Monetary Authority of Singapore, I beg to move, 'That this Parliament, in accordance with section 6A(2)(d) of the Bretton Woods Agreements Act (Chapter 27 of the 2012 Revised Edition), resolves that the maximum amount of grants that the Monetary Authority of Singapore may give under a bilateral agreement (or its subsequent variations) to be made by the Monetary Authority of Singapore (on behalf of the Government of the Republic of Singapore) with the International Monetary Fund ('IMF') to support the Catastrophe Containment and Relief Trust ('CCRT'), is USD 17.6 million (approximately SDR 12.3 million Special Drawing Rights).'

I will be moving a second motion for a separate grant to the IMF's COVID-19 Crisis Capacity Development Initiative ('CCCDI'); and a third motion for a separate grant to the IMF's Trust for Special Poverty Reduction and Growth Operations for the Heavily Indebted Poor Countries ('PRG-HIPC Trust').

Singapore will be providing these three grantsThis paper uses an exchange rate of 1 USD = 0.70 SDR, as of 29 March 2021. The currency of commitment for our contributions to the CCRT and CCCDI is in USD whereas the currency of commitment for our contribution to the PRG-HIPC Trust is in SDR. as part of multilateral efforts to enhance the capacity of the IMF to assist vulnerable low-income countries, in responding to the COVID-19 pandemic.

Sir, with your permission, I would like to propose that the substantive debate on all the three motions takes place now, to allow the substantive arguments to be captured cogently in a single debate. Subsequently, we will still move and take the second and third motions separately in compliance with Parliamentary procedural requirements.

Assistance to Vulnerable Countries

As part of its mandate to ensure the stability of the international monetary system, the IMF provides financial assistance to countries experiencing balance of payments difficulties. To carry out its function, the IMF relies on resources provided by member countries. Singapore has been contributing to these efforts.

Arising from the COVID-19 pandemic, the IMF has seen a surge in requests for financial assistance, especially from low-income countries. IMF has therefore called on its members to help bolster its financial resources to assist the most vulnerable members in recovering from the severe impact of the pandemic.

The amendments to the Bretton Woods Agreements Act, approved by Parliament on 11 July 2016, enables MAS to make grants to the IMF as part of international efforts to assist low-income countries. This is subject to three conditions. First, such financial assistance is part of a collective action among IMF member countries; second, MAS publicly discloses key information about the financial assistance; and third, Parliament fixes by resolution the maximum amount of the grants.

I will now explain the context and considerations for the three grants.

Catastrophe Containment and Relief Trust

First, Singapore's grant to the Catastrophe Containment and Relief Trust, or the CCRT.

The CCRT was established in 2015 to provide debt relief to the IMF's poorest and most vulnerable members in the event of a natural catastrophe or global health pandemic. The relief on debt service will free up scarce financial resources to continue strengthening the eligible countries' medical care capacities and address the social and economic fallout from the pandemic.

The CCRT is in urgent need of replenishment. Its pre-COVID balance was USD 200 million. Since the onset of the pandemic, the IMF has disbursed over USD 500 million in debt relief to CCRT-eligible members. So the pre-COVID balance has been completely depleted. The disbursements were made possible through the additional contributions by other member countries, which has amounted to USD 800 million so far.

The IMF has requested for Singapore to contribute USD 17.6 million, or SDR 12.3 million, to the CCRT. This represents about 1.2% of the total amount of USD 1.4 billion or SDR 1 billion, needed to replenish the CCRT. Singapore's contribution is based on our quota share at the IMF and similar to how other countries' contributions are determined.

Covid-19 Crisis Capacity Development Initiative

Second, the COVID-19 Crisis Capacity Development Initiative, or CCCDI. Singapore's grant to the newly launched CCCDI will help to meet the urgent capacity development needs of countries affected by the COVID-19 pandemic.

The objective of the CCCDI is to help these countries develop effective policies to mitigate the economic impact of the pandemic and support economic recovery. This comes in the form of technical advice, practical tools, and policy-oriented training to build skills to manage the crisis.

IMF has reached out to member countries, including Singapore, to seek funding support for the CCCDI, and suggested that Singapore make a contribution of between USD 2 to 4 million. MAS proposes that Singapore contribute a one-off grant amount of USD 2 million, or SDR 1.4 million, to the CCCDI. It represents 2% of the total amount of USD 100 million needed to fund the CCCDI.

Somalia's Debt Relief

Third, contribution to the trust for Special Poverty Reduction and Growth Operations for the Heavily Indebted Poor Countries for Somalia's debt relief, or PRG-HIPC Trust.

The Trust will provide support for the debt relief of Somalia, which is in urgent need of assistance. The majority of IMF member countries, including the ASEAN-4 countries (Indonesia, Malaysia, Philippines and Thailand), have already committed to contributing to Somalia's debt relief package.

The IMF has requested Singapore to contribute USD 0.97 million (SDR 0.68 million). Singapore already holds funds in other IMF accounts to cover overdue payments incurred by members which are unable to pay, and the contribution will be drawn from these accounts. Singapore's contribution would form approximately 0.3% of the IMF's financing package of USD 344 million (SDR 242 million) for Somalia's debt relief.

Considerations

Why are we making these contributions to the causes of the IMF? In short, we live in an interdependent world and Singapore needs to do our part.

Particularly, the COVID-19 pandemic has underscored the need for decisive and urgent collective actions to manage global crises. As a highly open economy, Singapore has a strong stake in ensuring that the world contain the pandemic, restore people-to-people connections across the world, and support global economic recovery. By contributing to the three funds I mentioned above, we can play our part as a stakeholder of the international community.

The grants to the CCRT and the CCCDI will reduce the size of Singapore's Official Foreign Reserves by a total of USD 19.6 million (SDR 13.7 million)Singapore's Official Foreign Reserves stand at USD 382,632.5 million as at end-February 2021. . As explained earlier, the grant to the PRG-HIPC Trust will not affect the size of Singapore's Official Foreign Reserves. The proposed grant amounts are also reasonable and commensurate with Singapore's position and role in the global economy.

Conclusion

Mr Deputy Speaker, MAS has issued a press release on 31 March 2021 to inform the public of the grants and that it would seek Parliament's approval. Following Parliament's resolution to fix the maximum amount of grants that MAS can allocate to the IMF's CCRT, CCCDI and PRG-HIPC Trust, MAS will publish in the Gazette key information about the grants.

Mr Deputy Speaker, I beg to move.

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