PETALING JAYA, Aug 1 — Datuk Seri Anwar Ibrahim doused the prime minister's optimism over the country's credit outlook in cold water today, demanding urgent remedial action to arrest Malaysia's debt levels by placing curbs on reckless spending and shady government deals.

Pointing to Malaysia's debt-to-GDP ratio, which spiked to RM150 billion in 2012 from RM96.9 billion in 2010, Anwar said it was "no surprise" that Fitch Ratings had downgraded Malaysia’s sovereign credit rating outlook from "stable" to "negative".

"While the sharp rise in the Federal Government guaranteed debt... has not been factored in our budget deficit calculations, it cannot escape the radar of impartial economic and financial analysis," he said in a statement here.

"In this regard, we call on Najib to stop hoodwinking the people by bragging about our so-called ‘healthy debt-GDP ratio’ when in reality it is a case of sweeping our financial dirt under the ‘off-balance sheet’ carpet," Anwar (picture) added.

Anwar, formerly the deputy prime minister and finance minister, was weighing in on Prime Minister Datuk Seri Najib Razak's apparent downplaying of Fitch Ratings' report today, when the latter described it a temporary setback that would be addressed in the 2014 Budget.

In revising its outlook on Malaysia, Fitch Ratings had said this was following scepticism over the Najib administration’s ability to manage its finance weaknesses after Election 2013.

Fitch, however, affirmed the country’s long-term foreign and local currency issuer default ratings at A- and A, respectively.

”There are two things to the rating. One is that it affirmed our rating," Najib said today when commenting on the matter.

”Second is jut the revision of our outlook but that depends on the move the government would make but it is a concern that we share as a government and we would seek to address those concerns,” he said.

No details, however, were given as to how Putrajaya plans to tackle some of the concerns raised in the Fitch report, but Najib said his administration is looking at the various existing policy options as a short-term solution.

”The actual details would be unveiled specifically in the forthcoming Budget. At the moment we’re just looking at the various policy options to understand that there is a need to strengthen the fiscal and macro position,” he said.

But Anwar called Najib a "proverbial ostrich" for allegedly pretending that his administration's mishandling of public finances had no significant impact on Malaysia's economic outlook.

"No amount of creative accounting practices can change our financial red to black," he told the prime minister.

"Unless urgent remedial action is taken, it is clear that the promises made in the last elections about holding in trust public finances and more responsible fiscal management will remain hollow and the culture of reckless spending, opaque government procurement and privatisation processes and disregard for accountability remains the hallmark of Najib’s ‘transformation’ government," Anwar added.

Fitch Ratings' revision from a stable outlook adds to concerns over Malaysia’s high debt pile at a time when the currency has been pressured by bond fund outflows and talk of the US Federal Reserve ending its easy monetary policy.

Rival ratings agencies Standard and Poor’s and Moody’s both have a “stable” rating on Malaysia’s sovereign debt.

“Prospects for budgetary reform and fiscal consolidation to address weaknesses in the public finances have worsened since the government’s weak showing in the May 2013 general elections,” Fitch said in a statement. “Malaysia’s public finances are its key rating weakness.”

The long-ruling Barisan Nasional coalition retained power in May elections, but saw its parliamentary majority weakened in a vote that exacerbated racial divisions in the multi-ethnic country.

Najib, who could face a ruling party leadership challenge in October, has announced no fresh steps to cut the fiscal deficit, such as a long-anticipated consumption tax or a reduction in the government’s heavy subsidies for fuel and food.