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Singapore Government Securities (SGS) were
initially issued to meet banks' needs for a risk-free asset in their liquid
asset portfolios. In 1998, MAS spearheaded efforts to enhance the efficiency
and liquidity of the SGS market as part of its strategy to develop Singapore
as an international debt hub. Since then, the SGS market has grown
significantly, making it one of the fastest developing bond markets in Asia.
As the fiscal agent of the Singapore Government, MAS is empowered by the
Development Loan Act and the Government Securities Act to undertake the
issue and management of securities on behalf of the Government.
Unlike many other countries, the Singapore Government does not need to
finance its expenditures through the issuance of government bonds as it
operates a balanced budget policy and often enjoys budget surpluses. The
principal objectives of developing the SGS market are to:
i. provide a liquid investment alternative with little or no risk of default
for individual and institutional investors;
ii. establish a liquid government bond market which serves as a benchmark
for the corporate debt securities market; and
iii. encourage the development of skills relating to fixed income securities
and broaden the spectrum of financial services available in Singapore.
The amount of SGS issued is authorised by a resolution of Parliament and
with the President's concurrence. Each year, MAS seeks approval from the
Minister for Finance for the total SGS issuance amount for the new financial
year. MAS decides, in consultation with the SGS primary dealers, the timing
and amount of individual bond issues.
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