Breakdown of Net Investment Returns and Net Investment Income Components in Contributions to Government Budgets

Mr Speaker, Sir, from FY2016 to FY2020, the Net Investment Income (NII) and Net Investment Returns (NIR) taken into the Budget as Net Investment Returns Contribution (NIRC) was the maximum 50% allowable under the Constitution. We plan to take in the maximum 50% of NII and NIR for FY2021, in view of the expected overall Budget deficit.

I thank the Minister for his answer. I have got two supplementary questions. The first is, under the NIRC, I just wanted to understand if it is both the expected real rate of return that is estimated and is it also that of the net asset base.

The second is, in terms of the 2021 numbers, as I understand, there would be the similar 50% that will be taken in 2021 as with 2016 to 2020. In terms of the increase in the absolute NIRC contribution, may I ask the Minister what would that increase be attributable to? Would it be based on the higher rates of return or higher net asset base?

Mr Speaker, Sir, the answer to the first question is yes. It is a combination of both, obviously. The absolute dollar amount that we get from NIRC will be both a function of the smoothened net asset base as well as the expected long-term rate of return. That is the NIRC framework.

As to the components which contribute to the FY2021 figures, I do not think we have the breakdown today. Because there would be a process based on what the smoothened base is and then, what the expected long-term rate of return is, and there are processes in place, as we have described in this House, to ascertain each of these figures which then are submitted to the President's Office for the President's approval.