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Explainer: Why is Govt tabling Bill to allow borrowing for major infrastructure projects, what safeguards are in place?

SINGAPORE — A Bill that will allow the Government to borrow funds for long-term infrastructure projects, with some strict safeguards in place, was tabled in Parliament on Monday (April 5).

Explainer: Why is Govt tabling Bill to allow borrowing for major infrastructure projects, what safeguards are in place?

Infrastructure to help Singapore combat the effects of climate change, such as rising sea levels, are among the projects that may be funded under the Singapore Infrastructure Government Loan Act, when it is passed.

  • Deputy Prime Minister Heng Swee Keat said that the Singa Bill will allow the Govt to finance ‘nationally significant infrastructure’
  • This is not the first time Singapore has done so, having previously borrowed for major projects such as Changi Airport
  • There will be safeguards in place to ensure that future generations that may have to bear some of the costs of the loans will benefit from the projects


SINGAPORE — A Bill that will allow the Government to borrow funds for long-term infrastructure projects, with some strict safeguards in place, was tabled in Parliament on Monday (April 5).

Deputy Prime Minister Heng Swee Keat, who is also Finance Minister, said in a Facebook post on Monday that the Significant Infrastructure Government Loan Act (Singa), when passed, will allow the Government to borrow to “finance nationally significant infrastructure that are critical for our long-term development”.

This borrowing will spread out the “lumpy expenditure” from these projects across the generations who will benefit, he added.

Mr Heng had first announced this Bill in February during the Budget announcement.

TODAY explains the reasons why this Bill is being introduced, as well as what borrowing safeguards and criteria are in place.


The Ministry of Finance (MOF) said in a statement on Monday that there will be a spike in development expenditure over the next decade, with the bulk of the borrowing being for new rail lines such as the Cross Island Line and the Jurong Region Line.

The rest will be for projects such as those for climate change adaptation, major highways and the deep tunnel sewerage system, which will serve Singapore's western region and city area.

To finance such projects, Mr Heng had announced in February that the Government is intending to issue new bonds, which are investment instruments where investors get a fixed rate of return over a set period.

Borrowing under Singa will allow the Government to spread out the costs of infrastructure across generations, said MOF, and this is fair, as these generations will directly benefit from the infrastructure.

It is also efficient, said MOF, as Singapore’s creditworthiness in repaying investors — having a AAA rating, the highest level — will mean that it will likely be able to tap the debt market at low interest rates.


No, it is not the first time that the Government has borrowed funds for significant infrastructure projects.

It had borrowed funds in the 1970s and 1980s under the Development Loan Act to finance development expenditure for the first MRT lines, as well as for Changi Airport Terminal 1 and 2.

By the 1990s, as the nation was growing rapidly, it could use rising revenues to meet the recurrent needs of residents at that time and pay for infrastructure needs in full, even generating some surplus. Thus, there was no longer a need to borrow.


The borrowing permitted under the Bill can only be for “nationally significant infrastructure”, and must abide by the following criteria:

  • The infrastructure should be owned by the Government, and controlled by or on behalf of the Government

  • The expected total project cost should be at least S$4 billion. To be part of one project, components must be physically contiguous or operationally dependent. For instance, a train line that has many construction phases, such as the Circle Line, will be considered a single project

  • The infrastructure should be available for use for at least 50 years, so that it can generate benefits that can be enjoyed by more than one generation

  • The projects should also support national productivity or Singapore’s economic, environmental or social sustainability


Prudential safeguards will ensure a sustainable debt level and interest burden for future generations:

  • There will be a gross borrowing limit of S$90 billion, meaning that in total, the Government cannot raise more than this amount in loans under Singa

  • This S$90 billion limit is based on expected development expenditure on nationally significant infrastructure over the next 15 years

  • There will also be an annual interest threshold of S$5 billion, which means the Government may not raise any more loans under Singa if the total interest costs for existing loans under the Singa have crossed S$5 billion in the previous financial year

  • This is to avoid imposing overly onerous financing costs on future generations, said MOF

Any future changes to the gross borrowing limit or annual interest thresholds will require the Government of the day to pass a new Bill in Parliament to amend Singa, which will hold the Government accountable should it wish to borrow beyond the prescribed limits.

The Monetary Authority of Singapore intends for bonds under Singa to be issued as a new category of Singapore Government Securities (SGS), named SGS (Infrastructure).

The existing SGS will be renamed SGS (Market Development), and both categories of SGS will rank side by side for them to be priced along the same yield curve, and the same tax and regulatory treatment would apply to both categories.

The first issuance of the SGS (Infrastructure) is expected to take place in the fourth quarter of this year.

The Singa Bill received its first reading on Monday. The Bill will be debated in May.

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