Fitch affirms Malaysia’s ‘A-’ credit rating but changes outlook to negative

Fitch Ratings’ outlook for Malaysia underlines fiscal measures taken to cushion the blow of Covid-19, says the finance minister. (Reuters pic)

PETALING JAYA: Fitch Ratings has affirmed Malaysia’s long-term foreign-currency issuer default rating at “A-” but also reviewed its outlook from stable to negative, the finance ministry announced today.

Finance Minister Tengku Zafrul Aziz said the rating agency also predicted the nation’s economy to record a 5.8% growth in 2021.

He said the rating outlook of other advanced and emerging economies had also been lowered as countries implement fiscal measures to cushion the blow of the Covid-19 pandemic.

Tengku Zafrul said the revision in ratings meant those countries exhibited weaker prospects of growth and fiscal positions compared to before the pandemic.

“Malaysia continues to maintain a healthy external position with substantial external assets by banks and corporations, a current account surplus and adequate level of international reserves.

“Reinforcing Malaysia’s external resilience is our highly liquid and deep domestic government bond market and the presence of strong domestic institutional investors.

“This has enabled Malaysia to substantially reduce reliance on foreign currency financing,” he said in a statement today.

Tengku Zafrul said Malaysia had entered the choppy economic period from a strong position, adding that its healthy financial system, policy framework, adequate buffers and strong domestic institutional investors would help the economy in this period of time.

He said Putrajaya’s economic stimulus measures would ensure Malaysia could benefit from the forecasted global recovery in 2021, and reiterated that the Prihatin Nasional package was expected to add 2.9% to the nation’s GDP growth.