Singapore's World Bank fee raised to $857m

SINGAPORE- Singapore's contribution to the World Bank will rise by more than 17 times to US$672 million (S$857 million), after Parliament gave its approval yesterday.

The higher subscription to the International Bank for Reconstruction and Development (IBRD) - the main arm of the World Bank that supports developing countries - is part of a move by the IBRD to increase its overall capital by US$86.2 billion.

In explaining the reason for the increase to Non-constituency MP Gerald Giam, who had asked how the new figure was derived, Deputy Prime Minister Tharman Shanmugaratnam said Singapore cannot be a "free-rider" in the global system.

Singapore has to play a part in the global effort to supplement the World Bank's resources, as the Republic has a vested interest in having strong and effective multilateral institutions, he said.

"Given our role as a major financial centre and the importance of a healthy global economy to our economic prospects, we should participate in this global effort... we cannot be a free-rider."

Of this new fee Singapore is paying, US$38 million, or about 6 per cent, had been set aside in the national Budget last year, Mr Tharman said.

The remainder, known as callable capital, will not be drawn by the IBRD except in extreme circumstances, when it cannot meet its obligations on borrowings or guarantees.

The increase in subscription to the IBRD is the first since 1966, and will also mean a rise in Singapore's voting power in the IBRD, from 0.05 per cent to 0.25 per cent.

But Mr Tharman said the Republic's larger 0.24 per cent stake in the World Bank would still be lower than its share of global gross domestic product, trade and cross-border investments. Singapore's share of world GDP is about 0.4 per cent.

This is because Singapore started out as a developing country making small contributions, he said, when, in fact, the amount should be in proportion to Singapore's size and role in the global economy.

"We are playing a responsible role and increasing our contributions, but we are not over-committing," Mr Tharman said.

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