“If the ratings are downgraded, the lending cost will go up and individuals, as well as businesses, will suffer due to the higher cost of borrowing,” the prime minister said.
“(Hence) it is essential to keep our deficit down, to keep the government debt below the self-imposed level of 55% of GDP (gross domestic product), and to ensure that our sovereign credit rating remains within the ‘A’ band,” he said at the launch of Invest Malaysia 2018 here today.
The prime minister was referring to the top investment credit rating band.
As at June 2017, debt was recorded at 50.9% of the GDP.
Najib, who is also the finance minister, said if the ratings were downgraded, lending costs for all, including businesses and individuals seeking loans, would increase.
“All would suffer. GST (goods and services tax) has protected us from that,” he added.
Meanwhile, Permodalan Nasional Bhd group chairman Abdul Wahid Omar said the rating closely reflects the country’s sustainability and economic fundamentals.
He said the government had set up numerous strategies and holistic policies in managing the economy to ensure the country’s long-term sustainability.
If Malaysia did not manage its finances well, it would risk being downgraded, said Wahid, who served as a senator and minister in the Prime Minister’s Department in charge of Economic Planning from June 2013 to June 2016.
“If our credit rating (were) to be downgraded, then our cost of borrowing would go up and so on. That’s something which must be avoided,” he told reporters on the sidelines of the event.
The former minister added that Malaysia’s current “A” rating by Standard & Poor’s, or A3 rating by Moody’s Investors Service, had enabled the corporate sector to borrow at a reasonable level.