KUALA LUMPUR, April 14 — The government welcomes Moody’s Investors Service’s (Moody’s) affirmation of Malaysia’s sovereign credit rating at A3 with a ‘stable’ outlook.
The Ministry of Finance (MoF) said in a statement today that the affirmation of this rating reflects the country’s determination to maintain the momentum of economic growth and resilience despite facing a challenging and uncertain global environment.
In line with the Malaysia Madani vision, MoF said the government is committed to driving inclusive and sustainable growth, restoring confidence in public institutions and governance and defending social justice for all Malaysians.
“The government will continue to work to further strengthen economic growth and attract more investment while focusing on initiatives to control inflationary pressure and reduce the burden on the people.
“The government is also committed to implementing fiscal reforms and controlling debt levels to ensure a strong economic structure as well as an authoritative institutional framework in managing public finances,” said MoF.
Moody’s has today affirmed the Malaysian government’s local and foreign currency long-term issuer and local currency senior unsecured debt ratings at A3 with a stable outlook.
It said in a statement that the rating reflects Moody’s expectation that the diversity and competitiveness of the Malaysian economy as well as the government’s access to strong domestic funding sources will continue due to credit strength, helping to reduce fiscal risks that have increased due to the Covid-19 pandemic, including increased debt burden and low debt capacity.
The rating agency also expects the country’s main economic policy-making institutions to maintain their credibility and independence despite four changes in government since 2018.
It said the stable outlook reflects Moody’s view that risks to the credit profile remain consistent with the A3 rating level based on current assumptions.
“On the positive side, Malaysia’s economic performance and resilience has the potential to be strengthened by the influx of foreign investment in high-value industries as companies restructure their regional supply chains, supporting stronger levels of growth than we currently expect,” it said.
Moody’s has concurrently affirmed the foreign currency ratings on the backed senior unsecured debt issued by Malaysia Sovereign Sukuk Bhd, Malaysia Sukuk Global Bhd, and Malaysia Wakala Sukuk Bhd, the special purpose vehicles established by the government, at A3.
The associated payment obligations are, in Moody’s view, direct obligations of the government.
Malaysia’s local and foreign currency country ceilings remain unchanged at Aa1 and Aa2 respectively.
It said the five-notch gap between the local currency ceiling and the sovereign rating is supported by policymaking institutions that remain transparent and effective despite recent political uncertainties, as well as the country’s strong external position.
The one-notch gap between the foreign currency ceiling and the local currency ceiling takes into consideration Malaysia’s history of imposing capital controls, although the size of domestic savings and effective policies reduce the risk of volatile capital flows and potential transfer and convertibility restrictions in very low probability scenarios of the government seeing a need to impose them, it said.
These ceilings typically act as a cap on the ratings that can be assigned to the obligations of other entities domiciled in the country, it added. — Bernama
