TREASURY BILLS (Motion)

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TREASURY BILLS:

(Motion) The Second Minister for Finance (Mr Lim Hng Kiang): Mr Deputy Speaker, Sir, I beg to move,

That this Parliament, in accordance with Article 144(1)(a) of the Constitution of the Republic of Singapore and section 3(1) of the Local Treasury Bills Act (Chapter 167 of the 2002 Revised Edition), resolves that the Minister for Finance be authorised to borrow, by the issue of Treasury Bills in Singapore under that Act, a further sum not exceeding Ten Thousand Million Singapore Dollars (S$10,000,000,000), thereby in total a sum not exceeding Thirty Thousand Million Singapore Dollars (S$30,000,000,000).

Sir, on 25th September 2001, Parliament resolved, in accordance with section 31 of the Local Treasury Bills Act (Chapter 167, 1988 Revised Edition) that the Minister for Finance be authorised to borrow by the issue of Treasury Bills in Singapore a revolving sum not exceeding $20,000,000,000. As at 31st March 2004, the outstanding amount of Treasury Bills issued is $18,000,000,000. There is a need to raise the limit. The small issue size of the three-month Treasury Bills is hampering trading activities in the short end of the Singapore Government Securities curve as most of the Treasury Bills are locked up as minimum liquid asset requirements of financial institutions. The average issue size of three-month Treasury Bills is about $950,000,000, which is smaller than the average issue size of around $2-$2.5 billion for the longer term securities, and the average daily trading volume of Treasury Bills in 2003 was only $161,000,000, compared to $2.5 billion for Singapore Government Securities. To meet the market demand and to support capital market development efforts, the Monetary Authority of Singapore will gradually step up the Treasury Bill issue.

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I propose therefore that the current ceiling for borrowing by Treasury Bills of $20,000,000,000 be raised by another $10,000,000,000 to a total of $30,000,000,000. This ceiling will apply to the outstanding amount of Treasury Bills.

Parliament is requested to enable the Government to issue the Treasury Bills up to a total amount not exceeding $30,000,000,000.

Question put, and agreed to.

That this Parliament, in accordance with Article 144(1)(a) of the Constitution of the Republic of Singapore and section 3(1) of the Local Treasury Bills Act (Chapter 167 of the

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2002 Revised Edition), resolves that the Minister for Finance be authorised to borrow, by the issue of Treasury Bills in Singapore under that Act, a further sum not exceeding Ten Thousand Million Singapore Dollars (S$10,000,000,000), thereby in total a sum not exceeding Thirty Thousand Million Singapore Dollars (S$30,000,000,000).