KUALA LUMPUR – Datuk Seri Tengku Zafrul Tengku Abdul Aziz says Moody’s affirmation of Malaysia’s local and foreign currency long-term issuer ratings at A3, is validation of the country’s administration by the current government.
The finance minister said that the stable outlook with robust medium-term growth prospects, on the back of earnest Covid-19 containment measures was testament to this.
“It also demonstrates Moody’s confidence in Malaysia amid unprecedented credit rating adjustments globally, with credit rating agencies (CRAs) taking more than 220 negative rating actions since the onset of the pandemic,” he said in a statement today.
The government remains committed towards medium-term consolidation, as well as ensuring fiscal sustainability in the country, he added.
“Over the past decade, we have successfully reduced our fiscal deficit from 6.7% of gross domestic product (GDP) to 3.4%. Through judicious expenditure re-prioritisation efforts, Malaysia’s fiscal deficit in 2020 is expected to be amongst the lowest within the A-category, an exceptional achievement in the current, extremely challenging environment,” he said Tengku Zafrul said.
The government aims to reduce its deficit target from 6.0% of GDP in 2020 to 5.4% of GDP in 2021 to an average of 4.5% over the medium term, he reiterated.
“This will be guided by our medium-term fiscal framework and the formulation of the Fiscal Responsibility Act – one key reform initiative – to improve fiscal prudence, governance and transparency based on global best practices.”
In terms of financial intermediation, Malaysian banks are more resilient today due to the capital buffers built over the years and sound risk management practices, placing banks in a good position to support lending activities and the overall economy, said Tengku Zafrul.
Moody’s notably highlighted the credibility and effectiveness of the country’s institutional framework, particularly in the implementation of macroeconomic policies. This is evidenced by the structured and systematic policy measures’ implementation by 53 ministries and agencies since March 2020.
The implementation has also been diligently monitored, with updates shared weekly by the National Inter-Agency Economic Stimulus Coordination and Implementation Agency (Laksana) to promote transparency in public spending.
The government’s commitment towards effective execution of policy measures is also exemplified by the formulation of the country’s largest national budget at RM322.5 billion for 2021, Tengku Zafrul said.
“The government is confident that Malaysia’s sound economic fundamentals, strong fiscal discipline and decisive policy measures will help us respond strategically and proactively under this challenging Covid-19 environment, while minimising permanent economic scarring from the pandemic, to place the nation firmly on its path towards recovery.” – Bernama, January 28, 2021
