Singapore has high levels of Government debt as reported in the CIA Public Debt Factbook. Is this fiscally sustainable?
Yes. This is because the debt comprises Singapore Government Securities, Special Singapore Government Securities, and Singapore Saving Bonds, that are not used for spending.
The borrowing proceeds are invested. The Singapore Government has a strong balance sheet with assets well in excess of its liabilities. The Government has significant net assets and no net debt.
Looking only at the liabilities (i.e. debt) alone thus does not discriminate between two countries with the same level of debt but with very different levels of assets. Singapore is in fact a net creditor country, not a debtor country, and is able to earn significant investment income on its net assets.
This is why international credit rating agencies give the Singapore Government the highest short and long-term credit ratings of AAA. In an April 2012 report by BlackRock Investment Institute, Singapore also ranked 2nd in the BlackRock Sovereign Risk Index in terms of creditworthiness.
A key strength highlighted was Singapore's net asset position.
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