Govt disappointed with Fitch’s rating, committed to good governance

by AZREEN HANI/ FILE PIX

THE  government is disappointed with the outcome of Fitch’s rating which downgraded Malaysia’s sovereign rating to BBB+ from A-, as the country is still managing the economy in an unprecedented level due to Covid-19, says Finance Minister Tengku Datuk Seri Zafrul Aziz.

“By honing in on Malaysia’s fiscal position and political situation, Fitch’s decision does not give due justice and credit to our crisis response efforts and our strong economic fundamentals,” said Tengku Zafrul in a statement today.

“Moreover, we have already started to see the green shoots of economic recovery, attributed to the various stimulus packages implemented by the Government since March 2020.”

Tengku Zafrul added that the government has responded swiftly and consistently in addressing the pandemic crisis as demonstrated by no less than four stimulus packages worth RM305 billion (USD75 billion) or approximately 20% of GDP to help the people and businesses.

“After nearly a decade on the fiscal consolidation path, we have successfully halved our fiscal deficit from 6.7% of GDP in 2009 to 3.4% in 2019. However, due to the unprecedented COVID-19 crisis, the fiscal deficit is expected to reach 6.0% in 2020 and 5.4% in 2021,” he explained.

As a result of the Government’s efforts and prudent approach, Tengku Zafrul said Malaysia’s fiscal deficit is still expected to remain among the lowest within the A category in 2020.

The Malaysian Reserve earlier reported that Fitch Ratings has downgraded Malaysia’s sovereign rating due to impact of coronavirus and political instability.

The agency said in a statement today that the depth and duration of the pandemic have weakened several of Malaysia’s key credit metrics.

The minister also said that Malaysia remains committed to good governance. Its strong institutional setup will ensure the effective implementation of public policies focused on enabling sustainable economic recovery and preventing permanent economic scarring from Covid-19.

“The Government takes note of Fitch’s concern regarding the domestic political situation. Yet, it is worth noting that key legislations have been passed in relation with the financing of Covid-19 measures, as well as for the protection of affected businesses and individuals until 2022.

Budget 2021 was also recently passed at the policy stage on the back of continuous Government engagement with numerous stakeholders,” he said.


Read our previous report here:

Fitch downgrades Malaysia’s rating to ‘BBB+’ due to pandemic, political instability