The Singapore government’s very strong fiscal and debt metrics are sustaining Moody's Investor Service's Aaa rating for the country.
The ratings are further supported by a strong growth outlook over the coming five years, which builds upon the city state’s attractive investment environment and a very high degree of competiveness.
Singapore’s extraordinarily large net external creditor position is a key credit strength, providing an ample cushion against exogenous shocks as well as a basis for monetary management.
While Singapore's ratings are at the highest level, maintaining a market-friendly and fiscally prudent economic policy approach will be credit positive, says Moody's.
The International Monetary Fund has noted that the government's external assets as well as consolidated public sector finances would enhance transparency.
In Moody's view, the stable rating outlook is unlikely to change over the next 12 to 18 months, given the government's very strong credit fundamentals.
However, the rating could come under downward pressure should the country or the region slip into political or economic instability.
In such a very remote scenario, fiscal strains may emerge and the ability of the country to function as an international center of finance and commerce could be jeopardized.
In terms of institutional strength, Singapore shows very high and stable scores in most of the World Bank's Worldwide Governance Indicators. Except for "Voice & Accountability", all scores are in the 90th percentile when compared to Moody's universe of rated sovereigns, with particular strengths in "Government Effectiveness", "Regulatory Quality" and "Control of Corruption".