Why Moody's gives Singapore Budget 2013 a two thumbs up

"It does not go overboard".

According to Moody's comments on the Singapore budget, it reinforces the government’s commitment to continue with its push to improve Singapore’s productivity and sustain strong growth over the longer term. 

Productivity levels are particularly low in sectors such as construction and services which rely heavily on foreign labor. \

Here's more from Moody's:

By increasing by an average of 30% the levies paid by businesses on their employment of foreign workers in the services sector and by 40% for other sectors over the next two years, the government’s goal is to force companies to reduce their reliance on manpower in general and foreign workers in particular, spurring productivity improvements through greater automation and capital enhancement.

In addition, the budget aims to advance economic restructuring, while providing support to businesses and households. Business-friendly corporate income tax rebates and a range of productivity-enhancing initiatives will enhance growth potential.

Meanwhile, personal income tax rebates and special transfers will alleviate pressures from the rising cost of living on lower-income households.

Economic restructuring is a process which will take place over many years, but Singapore’s very strong fiscal position provides it with ample scope to ensure that this transition is smooth.

Even more importantly, the announced budget does not go overboard with populist measures, but takes a calibrated approach with regard to fiscal handouts.

This allows the government to retain the option to increase support measures in future budgets, without challenging Singapore’s fiscal rule, thereby underlining its prudent approach in fiscal policymaking, a strength in its sovereign creditworthiness.