He misses the point that if the government were to borrow from the market on a large scale, Singapore’s credit rating would no longer be triple-A.
We can agree with the government’s defence if it were to borrow, say, 10% or 20% of GDP from the market. But if the government were to borrow up from the market up to 100% of our GDP, the credit ratings of Singapore will quickly fall. In turn, this affects how much the government can borrow further.
For the record, Singapore recorded an overall government debt of 105.5% of GDP in 2013.[1]
It is not news that Singapore and Japan enjoy reasonable credit ratings because the national debt of these countries is internal. The rationale behind such a credit rating is that Singaporean and Japanese citizens are unlikely exit their countries en masse suddenly, like in the case of a bank run.
The debates over CPF should rightly be focused on questioning the need for a compulsory annuity scheme for all account holders (see also our article for instance). But Singaporeans are right to also question the flows in the monetary system, not least when it affects their own money in their CPF accounts.