MOF: “ … which allows the Government to spend up to 50% of the expected long-term real returns (including capital gains) from the net assets invested by our investment entities.”
It is interesting to note that PAP is able to count the chickens – expected capital gains – before they are hatched.
One of the ways for PAP to spend expected profits is when state assets have been injected into Temasek at below market value.
In “CapitaLand to buy Temasek unit Ascendas-Singbridge in S$11b deal, creating Asian giant” (BT, 14 Jan), the value of state assets previously injected into Ascendas-Singbridge were not disclosed.
There are of course many Temasek subsidiaries which have benefited from the injection of state assets at lelong prices.
If PAP had needed funds in 2009, it could have issued bonds. No sane government will spend expected returns from capital gains for obvious reasons.
Something is not quite right with the NIR framework.