"Singapore's Grant to the International Monetary Fund's Poverty Reduction and Growth Trust" - Motion Speech by Mr Ong Ye Kung, Minister for Education (Higher Education and Skills) and Second Minister for Defence, on behalf of Mr Tharman Shanmugaratnam, Deputy Prime Minister and Minister in charge of the Monetary Authority of Singapore on 10 November 2016
Mdm Speaker, on behalf of Deputy Prime 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 to support the Poverty Reduction and Growth Trust, is 14,510,000 Special Drawing Rights (approximately 20,017,415 United States Dollars).”
2 I will be moving a second motion for a separate grant to the International Monetary Fund’s (“IMF’”) Catastrophe Containment and Relief Trust.
3 Singapore is making both grants as part of a multilateral effort to enhance the capacity of the IMF to assist low-income countries. I will cover both grants in this speech.
4 The Bretton Woods Agreements (Amendment) Bill was passed in Parliament on 11 July 2016, and amendments came into effect on 7 October 2016, to enable MAS to make grants to the IMF as part of international efforts to assist low-income countries. Before the amendments, MAS had powers to provide only loans and interest-free deposits to the IMF.
5 To recapitulate, the Bretton Woods Agreement Act (“BWAA”) institute the following safeguards that apply when MAS makes grants to the IMF:
a. First, MAS will provide financial assistance only as part of a collective action among IMF member countries;
b. Second, in the interest of transparency, MAS will disclose publicly key information about the financial assistance; and
c. Third, Parliament has to fix the maximum amount of the grants by a resolution
6 I will now explain the context for the two grants, namely, the Poverty Reduction and Growth Trust and the Catastrophe Containment and Relief Trust.
POVERTY REDUCTION AND GROWTH TRUST
7 First, the grant to the Poverty Reduction and Growth Trust (“PRGT”) will support IMF’s concessional lending to low-income countries. In July 2009, the IMF agreed to boost its capacity to provide concessional loans to low-income countries in the wake of the global financial crisis. To fund the PRGT, 165 IMF member countries, including Singapore, agreed in 2012 to contribute at least 90% of the distributed profits from the sales of the gold holdings at the IMF.
8 Hence, Singapore’s share of the IMF’s gold sales profits amounted to SDR 14,486,963 (USD 19,985,635) and was pledged to the PRGT in 2012 as part of a multilateral effort. Our pledge was conditional on the necessary amendments being made to the Bretton Woods Agreements Act.
CATASTROPHE CONTAINMENT AND RELIEF TRUST
9 The grant to the Catastrophe Containment and Relief Trust (“CCRT”) serves a more specific purpose. The CCRT will enable the IMF to provide debt relief to low-income countries facing natural disasters and fast-spreading epidemics. In February 2015, the IMF established the CCRT in response to the 2014 Ebola outbreak in West Africa. The CCRT was partly financed with member countries’ unutilised balances under the previous Multilateral Debt Relief Initiative (“MDRI”)1.
10 In July 2015, Singapore joined the international effort to pledge its unutilised contributions of SDR 224,994 (USD 310,393) in the previous MDRI to the new CCRT aimed at the countries facing catastrophic situations.
CONSIDERATIONS FOR SINGAPORE
11 As a highly open economy and international financial centre, Singapore has a strong stake in preserving a healthy global economic environment. Both the PRGT and CCRT contribute to this purpose. We should do our part in multilateral efforts to strengthen the IMF’s capacity to assist vulnerable, low-income countries and enable them to benefit from global economic integration. Developing countries in our region, such as Cambodia, Lao PDR and Myanmar, will be able to benefit from these initiatives.
12 Mdm Speaker, MAS proposes to proceed with these two grants to the IMF’s PRGT and CCRT, comprising the monies pledged and the interest earned on the monies.
13 The proposed grants to the PRGT and CCRT will adhere to the safeguards pursuant to the BWAA. Following Parliament’s resolution to fix the maximum amount of grants that MAS can allocate to the IMF’s PRGT and CCRT, MAS will publish in the Gazette key information about the grants. To further ensure transparency, MAS had also issued a press release on 2 November 2016 to inform the public of the grants and that it will seek Parliament’s approval.
14 Mdm, I beg to move.1 The MDRI was an initiative by the IMF, the World Bank Group's International Development Association, and the African Development Fund, to provide relief on the debt obligations of qualifying low-income countries. The MDRI Trusts were terminated with the establishment of the CCRT.