By Chris Kuan
Minister in the Prime Minister’s Office Chan Chun Sing also said at the People’s Action Party rally on Friday that a candidate for Bukit Batok SMC by-election wanted to give the impression that “we are cheating Singaporeans”. But the market was not stupid, he said.
“Why is Singapore one of 11 countries in world that has triple-A ratings from all three credit rating agencies?” he pointed out.
I’ll answer it for Chan Chun Sing even if he avoided the essential truths of the triple-A rating. That rating is mainly based on
1. The constitution rule that forbids the government from running deficits over the parliamentary term.
2. The massive year-on-year budget surpluses ran by the government, amounting to an average of nearly 10% of GDP per year over the past 15 years alone.
Those budget surpluses that underpins the government finances do not appear out of the blue and they certainly do not result from some magical fiscal policy formula. Those surpluses results from selling land at ever increasing prices, excess returns from investing debt proceeds which includes CPF and low social expenditures.
In other words, those triple-A ratings are paid for by the people and by denying them financial security in retirement and healthcare.
And just to be clear, Norway and Singapore are the only ones among the 11 triple-A rated countries that have long-term budget surpluses. That means countries do not need to have budget surpluses to be rated triple-A, sustainable deficits will be enough. Norway’s long-term surpluses are from natural endowments, as for Singapore’s…… let’s put it this way, a transfer of wealth from households to the state.