Singapore rating to remain stable: Moody's

Singapore rating to remain stable: Moody's

SINGAPORE (Reuters): Singapore's Aa1 sovereign rating is
likely to stay in place for the medium term despite ongoing
problems in neighboring Indonesia, a senior analyst with Moody's
Investors Service said on Friday.

"I think that if the crisis were to go on or to worsen in both
Indonesia and Malaysia, one would have to give that some
thought," Moody's sovereign analyst for Singapore, Malaysia,
Indonesia and Hong Kong, Steven Hess, told Reuters.

"Singapore's rating at Aa1 already did incorporate the
neighborhood where it is located to some extent."

Hess said Singapore's large balance of payments surplus, large
fiscal surplus, strong international assets position and lack of
foreign debt would have given the city state an Aaa rating.

"We did not assign a triple A rating to Singapore precisely
because we did feel that it was dependent on Malaysia and
Indonesia."

Hess said the Aa1 rating was expected to stay stable over a
long period of time and was very secure.

"At that very high level, what the rating indicates to
investors is that the country is able to withstand shocks.

"We expect that if there should be a shock, Singapore would be
able to withstand it in the financial sense. Of course there are
undesirable consequences domestically for unemployment but in the
financial sense, we believe that Singapore has a strong
position."

Hess said the government's official 1999 gross domestic
product (GDP) growth forecast of minus one to plus one percent
was not "out of the realms of reality".

"We probably would tend to think it is as more on the minus
side then the plus side but I don't think it's very far away from
the range that the government has announced."

Hess said Singapore's financial system reforms, aimed at
securing a position as a regional and global financial center for
the city-state, were positive, but he sounded a note of caution
about lifting restrictions on the trading of the Singapore
dollar.

"You have to proceed with caution in the current environment.
Ultimately in the long run, to be a true financial center and to
increase your market share as a global financial center, having
fewer restrictions on currency is certainly one competitive
edge."

"In the current environment of great volatility in global
capital flows, I certainly wouldn't be one to say it is desirable
to lift all controls immediately."