The Ministry of Finance Malaysia (MOF) highlighted Moody’s Investors Service’s affirmed Malaysia’s local and foreign currency long-term issuer at A3 with a stable outlook.
Finance Minister, Tengku Zafrul Tengku Abdul Aziz said, despite Covid-19, the affirmation is a recognition of the Government’s strong fiscal discipline and robust medium-term growth prospects.
Malaysia launched four stimulus packages with a total value of RM305 billion, 20 percent of the gross domestic product (GDP) and are expected to contribute to four percentage points to the GDP as well.
This will set up for Malaysia’s recovery as the projected growth target is between 6.5 percent and 7.5 percent in 2021.
“Moody’s highlighted the credibility and effectiveness of the country’s institutional framework, particularly in the implementation of macroeconomic policies,” Tengku Zafrul said.
However, Fitch Ratings has downgraded Malaysia’s based Petroliam Nasional Berhad (PETRONAS)’s Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) rating from “A-” to “BBB+” on December 4, 2020.
Fitch Ratings pointed out the depth and duration of the Covid-19 outbreak have weakened several of Malaysia’s key credit metrics with material relief measures for affected individuals and businesses even though the government responded swiftly to the crisis.
“Moving forward, Malaysia’s economic recovery will be driven by the efficacy of the public healthcare system, which has been further reinforced through the PERMAI Assistance Package,” he added.
Putrajaya will improve external demand from major trading partners to further support economic growth and resiliency by diversifying the economy and existing infrastructure projects with high growth multipliers.
The government is also investing in encouraging technologies and digitalisation, and tax and investment incentives to sustain Malaysia’s attractiveness as an investment destination to boost the longer-term economic prospects.
“We are committed to medium-term fiscal consolidation as well as ensuring fiscal sustainability of the country. We aim to reduce our deficit target from 6 percent of GDP in 2020 to 5.4 percent of GDP in 2021, and to an average of 4.5 percent over the medium term,” he concluded.
Malaysia’s sound economic fundamentals, strong fiscal discipline and decisive policy measure would respond strategically and proactively under a challenging Covid-19 environment while minimising permanent economic downfall.