US-based credit rating agency Moody yesterday (Dec 8) rated Singapore “AAA” for creditworthiness and gave a “stable” outlook for the country’s economy. The “AAA” rating means investors interested in Singapore bonds are given higher assurance that the government will honour the payouts.
Moody gave 2 explanations for the rating:
1) Significant economic, fiscal and financial buffers
2) Strong institutional framework and high policy effectiveness
The credit rating agency also praised the Singapore government for the “ability to adapt policies”, and said that even with the weakening economy, they expect the volatility to be lower and more consistent with other AAA-rated economies. Other countries that were also given “AAA” ratings are Australia, Canada, Denmark, Norway and Germany.
However, the sound rating is at best a hindsight as they are graded purely on economic statistics and figures based in 2015. The rating does not take into account current circumstances and developments that are taking place, that would affect the creditworthiness of the Singapore government.
Such “AAA” ratings have little concern for CPF holders. Ranging from Minimum Sum and interest rates to Withdrawal Age, CPF rules have been re-written and changed more times in the past 12 years under Prime Minister Lee Hsien Loong than the 39 years under his father and his predecessor prime ministers. Controlling the Parliament, President (appointed by ruling party) and the sovereign wealth funds (as chairman of GIC while his wife being the CEO of Temasek Holdings), the dictator Prime Minister have no worries about meeting CPF payout obligations. With the limitless power to lower and lengthen debt obligations of the CPF retirement fund, it is of little use knowing that the funds are “AAA”-rated and yet cannot be touched.
One just need to look at the present state of Singapore elderly to be reminded that “AAA”-ratings are but empty promises to the people. According to the latest labour statistics from the Ministry of Manpower, the number of Singaporeans, aged 60 and above, being forced out of retirement to work has more than doubled from 5.5% in 2006 to 13% in 2016. This is largely due to the insufficiency of the CPF, and hence more people are coming out of retirement, alongside with CPF payout, to sustain their living.