A file photograph showing a view of the offices of Fitch Ratings in New York on 29 April 2010. - EPA
KUALA LUMPUR: Fitch maintained Malaysia's long-term foreign currency issuer default rating (IDR) at A- and local currency at A, with the outlook revised to stable from negative previously.
Fitch said in a statement that Malaysia's fiscal finances have improved and views progress on the Goods and Services Tax (GST) and fuel subsidy reform as supportive of the fiscal finances.
The Southeast Asian net energy exporter has been navigating through a tricky economic environment where oil prices have softened and its ringgit currency weakened to 10-year lows against the US dollar. Issues surrounding state fund 1MDB have also weighed on Malaysia's currency and credit rating.
Fitch attached a "negative" outlook to Malaysia in July 2013, and suggested earlier this year that there was a 50% chance of a downgrade in the rating.
"The depth of Malaysia's local capital markets supports the sovereign's domestic financing needs," Fitch said.
It added that while the share of non-resident holdings of government securities was high and the sovereign's debt profile was weak, "local agencies such as (the) Employee Provident Fund (state pension fund) can provide funding to support the sovereign in the event of a sell-off by non-residents".
The deficit was forecast to narrow further this year despite lower oil prices, Fitch said. Nevertheless, it said Malaysia's fiscal position remained weak. – Reuters |
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