Posted by: rbbadger | February 1, 2009

What Singapore is doing

Singapore, like every other country, is faced with difficulties during this economic year.  However, Singapore is ready to meet the challenges in a way different from that of many other countries.  Throughout the years, Singapore has prudently stored away its budget surpluses.  It has huge financial reserves now, estimated to be worth some US$177 billion.  It has very prudently invested some of them.  However, Singapore law does not permit the government to spend them, at least not without the consent of the president.

Singapore is based off the Westminster system of government.  This means that most of the power is in the hands of the Parliament and more specifically in the Prime Minister and his cabinet.  The President of Singapore, much like the Queen in the UK, generally is concerned with matters of protocol and ceremony.  However, he does have some formidable reserve powers which he can excercise in the case of an emergency.  He may, if he so chooses, veto any request by the Government of Singapore to access the reserve funds. 

The Prime Minister, Lee Hsien Loong (son of the former Prime Minister Lee Kuan Yew who is the founding father of modern Singapore) went to the Istana to ask President S.R. Nathan to access the reserve funds.  The president gave his agreement “in principle”.  They will be spending about US$20 billion of these funds on various things, such as helping viable businesses get credit and giving credits to smaller companies to help keep their employees employed.  But they can do this precisely because they have saved.

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