KUALA LUMPUR : In a sign of confidence for Malaysiaâ€™s capital markets, Fitch Ratings has affirmed its â€œstableâ€ outlook for the country with an â€œA-â€rating.
In a statement yesterday, the international ratings firm said the recent Budget 2016 recalibration showed that the Government has remained committed to fiscal consolidation.
â€œWe view the macroeconomic assumptions made in the Budget as broadly realistic, with oil prices expected to average US$30-35 (RM130-148) per barrel this year while the countryâ€™s gross domestic product (GDP) is projected in the range of 4% to 4.5%,â€ it said.
Fitch added that it expected the ratio of government debt to GDP to rise modestly up until 2017 but to remain below the Governmentâ€™s self-imposed 55% ceiling.
Going forward, the firm expects Malaysia to record a GDP of about 4% in 2016 and 2017, below the five-year average of 5%.
The ringgitâ€™s decline as well as plummeting global oil prices last year coincided with capital outflows from Malaysia, putting pressure on its external finances last year, Fitch said.
â€œHowever, the decline in the ringgit has supported non-commodity exports, while the Government and state-owned enterprises expect to continue with strategic investment projects,â€ it said.
Fitch noted that Malaysian politics and governance standards came under the spotlight due to a range of domestic and international investigations into state-owned company 1Malaysia Development Bhd (1MDB).
â€œHowever, the political heat generated by these issues has not so far had a discernible impact on policy-making. For example, the Government has pressed ahead with controversial structural fiscal reforms, including a goods and services (GST) tax and the reduction in fuel subsidies,â€ it said.
Meanwhile, Bank Negara Malaysia governor Tan Sri Zeti Akhtar Aziz lauded the rating affirmation by Fitch as a sign of improving market fundamentals in Malaysia.
â€œIn this period of uncertainty, it is positive that the rating is unchanged, which underscored Malaysiaâ€™s high degree of resilience.
â€œDespite the challenging landscape, the policies put in place and the measures that have been taken have positioned us well to withstand the challenges,â€ she told reporters following a ground-breaking ceremony at the site of the new Asian School of Business in Kuala Lumpur yesterday.