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Fitch Ratings revises Malaysia’s outlook to stable

July 1, 2015
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Fitch Ratings revises Malaysia’s outlook to stable

KUALA LUMPUR: Malaysia’s zest in continuously improving its economic fundamentals and the government’s prudent fiscal management is paying off as rating agency Fitch has affirmed the country’s long-term foreign currency rating at A- and revised upwards its outlook to stable from negative.

Responding to the confidence shown by the international rating agency on Malaysia’s fiscal prudence, an elated Datuk Seri Wahid Omar said Fitch’s rating was now in line with S&P (A-, Stable Outlook) and Moody’s (A3, Positive Outlook).”

The Minister in the Prime Minister’s Department in charge of Economic Planning noted that Fitch Ratings had also affirmed Malaysia’s local currency Issuer Default Rating (IDR) at ‘A’, senior unsecured local currency bonds at ‘A’, the Country Ceiling at ‘A’ and the Short-Term Foreign Currency IDR at ‘F2’.

“The much awaited positive news shows the prudent fiscal management and economic policies carried out by the government,” he said in a brief statement.

Malaysia registered a strong economic growth of 5.6 per cent in the first quarter (Q1) of 2015, despite concerns over the volatility in oil prices and the implementation of the Goods and Services Tax (GST).

Inflation, as measured by the annual change in the consumer price index (CPI), averaged significantly lower at 0.7 per cent in Q1.

The country’s trade surplus amounted to RM21.3 billion in the quarter while international reserves of Bank Negara Malaysia amounted to RM389.7 billion as at March 31, 2015.

Fitch, in rating Malaysia, said the country’s fiscal finances were improving since last year with the general government deficit declining from 4.6 per cent of Gross Domestic Product (GDP) in 2013 to 3.8 per cent in last year, General government debt meanwhile declined vis-a-vis the GDP declined from 54.7 per cent at end 2013 to 53.9 per cent at end 2014.

Fitch said it views the progress on the GST and fuel subsidy reform as supportive of fiscal finances.

A further narrowing of the deficit is forecast this year despite lower oil prices. It noted that the depth of Malaysia’s local capital markets supports the sovereign’s domestic financing needs.–BERNAMA


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