Deep Dive on Singapore’s Net Investment Returns Contribution
Posted on 03/29/2022
The investment returns from Singapore’s reserves provide additional resources for its government spending. The investment returns by Singapore’s sovereign wealth and reserve funds are used to supplement the country’s fiscal budget.
Net Investment Returns Contribution
Net Investment Returns Contribution (NIRC) is comprised of up to 50% of the Net Investment Returns (NIR) on the net assets invested by Singapore’s GIC Private Limited, Monetary Authority of Singapore – MAS (central bank), and Temasek Holdings; and up to 50% of the Net Investment Income (NII) derived from past reserves from the remaining assets.
Prior to fiscal year 2009, there was only the NII component. The NIR component was introduced in fiscal year 2009 with the implementation of the NIR framework, which allows the Singapore government to spend up to 50% of the expected long-term real returns (including capital gains) from the net assets invested by its investment entities.
The Singapore government generally budgets to take in 50% of Net Investment Return Contribution (NIRC) at the start of each financial year. The actual NIRC taken in at the end of the financial year may vary due to changes in the fiscal position and to differences in the actual outturn for the maximum NIRC compared to what was budgeted at the estimates stage. From FY 2009 to FY 2013, the actual NIRC taken in has been close to the maximum 50%, with the Singapore government taking in on average slightly above 47% of the NIRC.
| Fiscal Period | Net Investment Returns Contribution – SGD | Singapore Government Overall Budget Surplus / Deficit – SGD |
|---|---|---|
| 2022 Budgeted | 21,558,000,000 | (5,433,000,000) |
| 2021 | 20,329,000,000 | (5,609,000,000) |
| 2020 | 18,244,000,000 | (51,567,000,000) |
| 2019 | 17,038,000,000 | 845,000,000 |
| 2018 | 16,413,000,000 | 3,339,000,000 |
| 2017 | 14,724,000,000 | 10,861,000,000 |
| 2016 | 14,577,000,000 | 6,125,000,000 |
Source: Singapore Ministry of Finance.