Read more at https://www.channelnewsasia.com/news/singapore/government-s-borrowing-plan-for-infrastructure-projects-gets-9996700
(Updated: )
Ricky Lim ·
This is a smart move to raise funds for investing in infrastructure that will enhance our future competitiveness without :-
(1) greatly increasing the tax
(2) pay high borrowing cost - as the bonds issued are guarantee by reserve
(3) reserve are not used - but instead can put used for other investment that can bring higher investment income more than the bond cost
(4) once infrastructure is completed - can help to repay the bond investors - the capital and interest - as the bond are usually long-term due for maturity eg. 10 years, 20 years, 30 years - where recurring revenue from the infrastructure invested can be used to repay the bond capital and interest.
Singapore is in this unique position because of the strong reserve we have - due to prudent saving and spendings for so many generations.
Other Countries who accumulate mammoth debt - will see their borrowing cost specifically bond cost go high up - and possibly the bond may be defaulted if the Government go bankrupt and the bond can become junk bond.
Future descandants will inherit the burden of financing the debt.
In Singapore, this is avoided because of our strong reserves.
(1) greatly increasing the tax
(2) pay high borrowing cost - as the bonds issued are guarantee by reserve
(3) reserve are not used - but instead can put used for other investment that can bring higher investment income more than the bond cost
(4) once infrastructure is completed - can help to repay the bond investors - the capital and interest - as the bond are usually long-term due for maturity eg. 10 years, 20 years, 30 years - where recurring revenue from the infrastructure invested can be used to repay the bond capital and interest.
Singapore is in this unique position because of the strong reserve we have - due to prudent saving and spendings for so many generations.
Other Countries who accumulate mammoth debt - will see their borrowing cost specifically bond cost go high up - and possibly the bond may be defaulted if the Government go bankrupt and the bond can become junk bond.
Future descandants will inherit the burden of financing the debt.
In Singapore, this is avoided because of our strong reserves.
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