by AFIQ AZIZ/ pic by MUHD AMIN NAHARUL
Moody’s Investors Service said that political uncertainty would not drag the country’s rating and credit profile.
Moody’s VP and senior analyst Christian Fang said although a period of political uncertainty may occur in Malaysia given the resignation of Prime Minister Tan Sri Muhyiddin Yassin, the country’s credible and effective institutions would limit the impact on its macroeconomic policies and credit profile as demonstrated over past episodes of abrupt political change.
He added that the pandemic remains the key risk in Malaysia, as the elevated number of new infections and ongoing restrictions – although less stringent compared to the second quarter of 2020 – will continue to weigh on the economic recovery this year.
“As such, if fiscal deficits remain wide for some time because of further economic stimulus or weak revenue, resulting in a persistent rise in the government debt burden that fiscal authorities are unable to reverse, this has the potential to materially weaken Malaysia’s credit profile,” he said.