LOCAL TREASURY BILLS (AMENDMENT) BILL

Order for Second Reading read.

The Minister for Finance (Dr Richard Hu Tsu Tau): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

The Bill seeks to amend the Local Treasury Bills Act to provide for the proceeds, redemption and related expenses of treasury bills to be accounted for under the Government Securities Fund instead of the Consolidated Fund.

Treasury bills are issued as part of MAS' money market operations and to provide liquid assets to the banking system for their reserve requirements. They are not issued to finance Government's expenditure.

However, the proceeds and expenditure of treasury bills are currently accounted for under the Consolidated Fund. As a result, the Consolidated Fund is inflated each time proceeds from the issue of treasury bills are paid into it, and are drawn down when bills are redeemed or when related expenses are incurred, even though these do not form part of Government's expenditure. To avoid such distortions to the Consolidated Fund, we have decided to account for the proceeds and expenditure of treasury bills under the Government Securities Fund.

The Government Securities Fund, or GSF for short, was set up in March 1992 as a self-contained fund to account for all loans, other than those raised to finance development projects. The proceeds from the issue of Government securities are paid into the GSF. The redemption and related interest payments of Government securities are also charged upon and payable out of the GSF. Bringing the treasury bills under the ambit of the GSF will rationalise Government's debt accounting practices through the use of a single fund, which is the GSF.

The Bill amends sections 4, 5 and 7 of the Local Treasury Bills Act by deleting the words "Consolidated Fund" wherever they appear and substituting them with the "Government Securities Fund". The Bill will only apply to treasury bills issued on or after the amended Act has come into force.

Sir, I beg to move.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [Dr Richard Hu Tsu Tau].

Bill considered in Committee.

[Mr Speaker in the Chair]

Clause 1 -

The Chairman: In page 1, line 4, the citation year "1995" will be changed to "1996". This will be done.

Clause 1 ordered to stand part of the Bill.

Clauses 2 to 4 inclusive ordered to stand part of the Bill.

Bill reported without amendment; read a Third time and passed.