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Saturday, February 24, 2018

Daily Lessons from Life 23-24 February 2018 - How much reserve is SAFE?

"‘Severe implications’ if Singapore does not have sufficient reserves as buffer: Chan Chun Sing

SINGAPORE: The use of Singapore’s reserves should not be taken lightly as there are “severe implications” if the country does not have sufficient reserves as buffer, said Minister in the Prime Minister’s Office Chan Chun Sing on Saturday (Feb 24).

Apart from the need to grow the reserves for the increasing needs of the next generation, Mr Chan said Singapore’s fiscal policy impacts the strength of its currency as well.

“How much we spend and how much we save will also signal to the currency markets what they can expect the strength of the Sing dollar to be,” said Mr Chan at a Chinese New Year dinner attended by grassroots advisers and residents of Tanjong Pagar and Radin Mas constituencies.

“If the world thinks we are running an irresponsible of unsustainable fiscal policy, you can well imagine what they will do to the Sing dollar,” he added.

“There are severe implications on what it means to not have a strong Sing dollar or not have sufficient reserves as our buffer.”

Mr Chan’s comments come after the Finance Minister’s Budget 2018 speech on Monday, when it was announced that the goods and services tax (GST) will be raised from 7 to 9 per cent sometime between 2021 and 2025. It is to help fund growing expenditure in areas like security, healthcare and other social spending.

Finance Minister Heng Swee Keat had explained in his Budget speech why the Government will not tap more of the reserves, a point reiterated by Senior Minister of State for Finance and Law Indranee Rajah at a dialogue on the Budget earlier this week.
Said Mr Chan: “The budget surplus (last year) was not a structural surplus but largely attributed to currency fluctuation ... hence, very much like our approach to restructure the economy for long-term growth, we too can’t afford to be short-sighted in the way we manage our finances. We have to be prepared for the long term.”
One of the most challenging issues for Singapore’s budget in the coming years is how to keep the healthcare system affordable, sustainable and fair, said Mr Chan who is also labour chief.

He cited the example of Singapore’s ElderShield scheme, which covers people with severe disabilities.

Currently, all Singaporeans and permanent residents with Medisave accounts are automatically enrolled in ElderShield at the age of 40 – unless they opt out – and pay premiums until they are 65 years old. But there may soon be changes to the scheme. A review committee had recommended last month that ElderShield coverage start from age 30 and be made compulsory.

“With a lower age limit and more policyholders starting contributions earlier, premiums for this severe disability insurance scheme can become more affordable, if we can have the entire population to risk pool together,” said Mr Chan on Saturday."

Not sure if the USA is submit to this 'national deficit' and your currency will be tanked principle! Probably not as USA is the world's BIGGEST debtors nation.

Let's not cloud the issues to be seriously discussed:

1. how to use our national reserve of more than USD300B, amount cannot be determined as even the Elected President, especially late President Ong was not able to know for sure the exact amount, to continue to build more reserve vs. to use the returns of the reserve for current fiscal year capital and recurring expenditure besides raising GST?

How much national reserve is ENOUGH? It is a bit like a rich man who had billions and yet worried about spending a billion or two to live his present life! Being very conservative and 'prudent', he will only spend 1/2 of his returns from his billions so that his billions can GO UP by another 1/2 of the returns.

One wonders who will TRULY benefit when this RICH MAN die, planned or unplanned regardless? His children, in Sgp case, the future generation of Singaporeans who are still alive? Some of whom would argue that they WON'T survive their current situation to enjoy the 'benefits' when the RICH MAN die since the RICH MAN, in this case, Sgp as a nation, can live longer, unless something catastrophic happened!

As for keeping the healthcare cost affordable. It has to rely on INSURANCE. A pooled risk sharing approach. The premium is NOT just dependent on HOW MUCH CLIAMS were made since EVERYONE knows that WHEN YOU have to draw on the healthcare insurance, your health is probably NOT very good!, but also HOW MUCH PROFIT should Insurers be making!!

With the promotion of Healthy Lifestyle becoming a National Movement, hopefully MORE Singaporeans who cannot 'afford' healthcare insurance premium will take better care of their health. Especially those 30 years old, which is hard as they cannot imaging they will grow old and frail one day!

For the generation that is Pioneer or Senior and ALREADY frail, the PG package and what not would have taken care of their medical needs.

It is the 30-50 years group that Sgp needs to work on diligently and influence them to have a healthy lifestyle.

All these MUST NOT detract from the fact that we need to decide HOW MUCH is SAFE for our National Reserve to be?

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