KUALA LUMPUR: The revision of Malaysia’s rating by Fitch Ratings is primarily driven by the negative impact of the Covid-19 pandemic on the country’s fiscal position and the ongoing domestic political situation, Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz said.
He expressed the government’s disappointment with the rating outcome, particularly in light of the current exceptional circumstances when the Covid-19 pandemic is still unfolding, report agencies.He said Malaysia has already started to see the green shoots of economic recovery, attributed to the various stimulus packages implemented by the government since March 2020.
“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,” he said in a statement.
Fitch today said it has downgraded Malaysia’s sovereign rating from ‘A-’ to ‘BBB+’, with an improved outlook from negative to stable.
According to Tengku Zafrul, credit rating agencies have taken over 220 negative rating actions since early March, with more than 100 sovereign downgrades as policymakers take urgent and vital measures to protect lives and livelihood.
Governments globally have committed US$11.7 trillion (RM47.5 trillion) in economic stimulus packages, leading to an increase in fiscal deficits by an average of nine per cent of gross domestic product (GDP), with global public debt projected to approach 100 per cent of GDP by end 2020, he said.
Back home, he said sound economic fundamentals and decisive fiscal measures have enabled Malaysia to respond swiftly, effectively and strategically to the challenging environment, whilst maintaining economic growth and resilience for the future.The government has responded swiftly and consistently in addressing the Covid-19 crisis with four stimulus packages worth RM305 billion or US$75 billion about 20 per cent of GDP to help people and businesses.
“These packages are expected to contribute over four percentage points to GDP growth in 2020.