Ratings agency S&P affirms Singapore's AAA credit rating

Ratings agency Standard & Poor's has affirmed Singapore's sovereign credit strength with a top AAA unsolicited rating and a "stable" outlook. -- PHOTO: ST FILE 
Ratings agency Standard & Poor's has affirmed Singapore's sovereign credit strength with a top AAA unsolicited rating and a "stable" outlook. -- PHOTO: ST FILE 

SINGAPORE - Ratings agency Standard & Poor's has affirmed Singapore's sovereign credit strength with a top AAA unsolicited rating and a "stable" outlook.

The ratings reflect Singapore's extensive fiscal and external strengths, effective policymaking, and political stability, the agency said on Wednesday.

The agency expects the Singapore government to continue running budget surpluses, albeit at lower levels than in the past, as it addresses the country's aging demographic profile and expands its social safety net.

Singapore's political institutions support the ratings, the agency said.

"The government has pursued a pragmatic and long-term approach to policymaking. Its policy responses are usually forward-looking, timely, and appropriate for countering economic challenges."

However, given Singapore's high export exposure and status as a financial center, the country is vulnerable to shocks, such as a sharp and protracted downturn in the advanced economies or rising credit costs.

Still, the country's extensive reserves and its flexible policy responses can buffer such shocks, and the probability that the ratings would be lowered in the next two years is low, Standard & Poor said.