MAS Loses Head, Gives US$4 Billion MORE to IMF

Well, maybe this shouldn't be considered news. MAS appears to have lost its head for quite sometime already. The organisation that we used to look on with justifiable pride has lost its mantle of financial prudence. First by letting financial institutions sell structured products of dubious benefit to Singaporean investors and then dropping the ball completely in the recent MF Global theft of segregated client funds.

And now this pledge of US$4 billion to the IMF which MAS had the gall to tell Singaporeans would "still remain part of Singapore's official foreign reserves". Hello...when you loan someone money, all you have left is an IOU that is only as good as the credit worthiness of your debtor. If it is truly still a part of our foreign reserves, then would the MAS confirm that we can use it to offset our international trade imbalances? For that to work, we should pledge it to the BIS (Bank of International Settlements) instead and tell the IMF to borrow it from them.

I'm not suggesting that Singapore should not carry our weight and shirk our responsibilities as members of international organisations. But the MAS is being less than honest I think in trying to pre-emptively deflect legitimate Singaporean concerns by downplaying if not outright lying about the risks.

Our US$4 billion contribution is a trifle and is more symbolic than critical to the IMF. It is however a telling sign of the desperation and credit worthiness of an entity when they need to accept contributors from small creditors. Any 'loans' made in this case should be with eyes wide open and realistically marked as a gift (ie: total loss) in our books.

Take a look at the following article from 2010:
IMF Prepares For Global Cataclysm, Expands Backup Rescue Facility By Half A Trillion For "Contribution To Global Financial Stability".
We can see quite a few of the contributors to the IMF are in the eurozone and thus are in no position to contribute their share. Afterall, this 'firewall' is meant for their protection!

Meanwhile, not a peep has been heard from the Protector of our Reserves, President Tony Tan. Apparently he is there to guard the reserves from being mis-spent on Singaporeans but when it comes to mis-spending it elsewhere, it's fine.