Friday, Fitch Ratings maintained Singapore's long-term foreign and local currency Issuer Default Rating at 'AAA' giving a stable outlook to the ratings. At the same time, the firm confirmed the country's short-term foreign currency IDR at 'F1+' and the country ceiling at 'AAA', giving both these ratings also a stable outlook.
Vincent Ho, Associate Director of Fitch's Asian operations said, Singapore's sovereign creditworthiness is underpinned by its strong external finances, solid public finances, stable political situation and flexible government policies. The country's public finances are structurally strong despite the current cyclical weakening amid the adverse effects of the global economic recession.
Fitch said that despite Singapore having a high gross external debt to GDP ratio of 306% in 2009, the country's net external credit position remained very strong and better than the 'AAA' median.
The general government had a fiscal surplus of 13.6% of GDP in the fiscal year 2008-09, lower than 17.8% in 2007-08, and far better than the 'AAA' median. At the same time, Fitch expects the general government's fiscal surplus to decline to 3.9% of GDP in fiscal year 2009-10, and expects the central government to record a fiscal deficit of 4% of GDP. The firm also expects the general government debt to rise in 2009-10.
Meanwhile, Fitch expects Singapore's economy to contract 12.6% in 2009, in line with recession in major advanced countries, but expects it to grow 2.2% in 2010.
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