S&P Affirms Credit Ratings For Malaysia

By Tengku Noor Shamsiah Tengku Abdullah SINGAPORE, July 25 (Bernama) -- Standard & Poor's Ratings Services (S&P) has affirmed its 'A-' long-term and 'A-2' short-term foreign currency sovereign credit ratings on Malaysia. At the same time, the rating agency has affirmed its 'A' long-term and 'A-1' short-term local currency sovereign credit ratings on Malaysia. The outlook on the long-term rating remained stable, it said in a statement. S&P also affirmed its Asean regional scale rating on Malaysia at 'axAAA/axA-1+'. The sovereign credit rating on Malaysia reflected the country's strong external balance sheet and considerable monetary flexibility, it said. "These strengths are weighed against moderate fiscal deficits and government debt burden," it said. The rating agency said policymaking in Malaysia has generally been effective, and institutions had remained stable since the 2013 elections. "The government's announcement of a new goods and services tax (GST) and subsidy rationalisation suggests that the narrower margin of electoral victory has not significantly impeded policymaking, reducing general concerns on the speed of government decision-making," it said. Consequently, it said, it now expected economic reform efforts to continue gradually. S&P said Malaysia's fiscal performance has improved more than it had expected. It projected the average rise in general government debt at 2.9 per cent of gross domestic product over the forecast period of 2014-2017, better than its forecast of 3.8 per cent a year earlier. S&P said the government's recent measures to reform subsidies and introduce GST (at six per cent) in 2015 would help fiscal consolidation. It said the government's plan to balance the budget by 2020 was encouraging. "However, its success will depend on the initiatives to materially reduce the size of the total subsidy, the rationalisation of general expenditures, and improvement of revenue collection," it said. Underpinning the sovereign ratings was Malaysia's strong external position, which was a result of years of persistent current account surpluses, it said. --BERNAMA