GEORGE TOWN, Jan 12 — Moody’s downgrade of Malaysia’s sovereign credit rating outlook may be a harbinger of worse things to come for the country’s economic situation this year, Penang Chief Minister Lim Guan Eng said today.
The Penang lawmaker labelled the downgrade “disturbing” and “distressing,” adding a warning that it would result in increased costs.
“This is an indictment of the performance of Malaysia's economy and despite Najib saying GST has saved the country, clearly foreign investors don't think so,” he said referring to Prime Minister Datuk Seri Najib Razak's claim that the government’s implementation of the Goods and Services Tax (GST) last year had improved the country's fiscal performance.
He also attributed the downgrade to high deficit, high national debts and the depreciation of the ringgit.
“The downgrade clearly showed that GST didn't save the people, and now investors and financial experts can agree and can see how Malaysians are suffering from the worsening economy,” he said.
“We have yet to feel the full impact of the continuous drop of the ringgit last year and we will feel the full brunt of it this year,” he warned.
On how Moody’s rating would impact investments in Penang, Lim said it hopes this would be minimal.
Yesterday, Moody's lowered Malaysia’s economic outlook from “Positive” to “Stable,” citing Malaysia’s weakened finances.
The international investment service agency attributed the downgrade to external financial pressures that has weakened the government’s revenue, but noted that Malaysia’s public debt burden had improved marginally since its credit rating was revised upwards last November.
