Singapore Government increases Govt. Securities Bill Cap to SG$1.5T

The issuance cap was last raised in 2021 to S$1.065 trillion, and it is projected that the government will reach this limit by 2025. As of October 2023, the total outstanding amount of government securities and T-bills stood at S$955 billion. MP Jamus Lim (WP-Sengkang) questioned the size of this increase, noting it was larger than previous increments. The approved an increase in the limit for government securities and Treasury bills (T-bills) issuance, allowing the government to raise an additional S$450 billion (US$337 billion). This brings the new cap to S$1.515 trillion, effective until 2029.

According to the Ministry of Finance (MOF), this increase ensures that the CPF Board will have the funds needed to pay its members. Chee Hong Tat, Second Minister for Finance, highlighted that the growth in CPF balances is anticipated to continue over the next five years, driven by higher wages and policy enhancements. For instance, the median gross monthly income from employment grew by 3.2% annually from 2018 to 2023.

The majority of this increase, over 60%, is expected to come from the issuance of Special Singapore Government Securities (SSGS), which are government bonds sold to the Central Provident Fund (CPF) Board. These special securities are fully guaranteed by the government, and the funds from the CPF are invested in them, earning a coupon rate linked to the interest rates paid to CPF members.

To meet the growing investment needs of CPF, particularly due to higher contribution rates for senior workers, more SSGS issuances are expected. Additionally, the rest of the raised limit will support the issuance of T-bills, Singapore Savings Bonds, and Singapore Government Securities to promote the development of a strong Singapore Government Securities market. This market plays a crucial role in the expansion of the corporate and retail debt market and serves to meet the demand for high-quality liquid assets.