The Business Times, 1 Aug 2022, Mon 5:52 PM
By Tessa Oh
THE S$7.4 billion loss recorded by the Monetary Authority of Singapore (MAS) in FY2021/22 was due to a “currency translation effect” and is not relevant to the regulator’s investment performance, which is measured in foreign currencies, said Finance Minister Lawrence Wong in Parliament on Monday (Aug 1).
Neither does it have a bearing on the international purchasing power of the official foreign reserves (OFR), nor MAS’ conduct of monetary policy, added Wong, who is also MAS’ deputy chairman.
The minister was responding to questions from Members of Parliament on the impact of MAS’ net loss on the government’s budget position.
Wong explained that while MAS made investment gains of S$4 billion on the OFR, these were outweighed by the negative currency translation effects of S$8.7 billion arising from a stronger Singdollar, amid MAS’ moves to tighten monetary policy.
This has no implication for the international purchasing power of the OFR, said Wong. “In fact, given the purpose of the OFR in safeguarding the international purchasing power of the Singapore dollar, it is the foreign currency value — rather than the Singapore dollar value — of the OFR that matters”.
MAS’ net loss also has no impact on Singapore’s net investment returns (NIR) — the returns on the net assets invested by MAS, GIC and Temasek.
As the NIR is based on the long-term expected returns of the 3 investment entities, it is not affected by their short-term performance, said Wong. Therefore, MAS’ net loss has no impact on the NIR that is available to the government.
As for MAS’ contributions to the government in lieu of corporate income tax, Wong said that the regulator’s contributions are paid in equal proportions over a period of 3 years. This has been the case since FY2019, when the government moved to smoothen revenue volatility.
“This means that even though MAS recorded a net loss for FY2021/22, the government received S$1.1 billion from MAS based on the contributions accrued for the previous 2 financial years when MAS recorded net profits,” he said.
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