MARC affirms Malaysia’s ‘AAA’/stable rating
KUALA LUMPUR: Malaysian Rating Corp Bhd (MARC) has affirmed its foreign currency sovereign rating of “AAA”/stable for Malaysia under its national rating scale.
MARC said the “AAA” rating reflected the country’s credit strengths, including a competitive and well diversified economy.
For example, Malaysia was positioned relatively high at No. 27 in the 2019 edition of the World Economic Forum’s Global Competitiveness Index 4.0 rankings.
“It is important to point out that Malaysia’s competitiveness has been evident in, among other things, a persistent current account surplus and consequently a healthy external position.
“Due in part to this, as well as proactive and practical economic and monetary management, spillovers from episodic financial market volatility into the real economy have been minimal.”
The rating agency said the key credit challenges included the disruptive Covid-19 pandemic and the recent crude oil price collapse.
Not surprisingly, it said the pandemic was the most worrisome factor.
“Against this backdrop, economic and financial risks have risen. In the private sector, for example, the pandemic and measures to contain its spread have severely impacted the balance sheets of corporates and households.”
MARC said to mitigate the impact of the pandemic, the government, in setting back fiscal consolidation, had announced a string of stimulus packages.
“Going forward, more measures could become necessary because we have yet to experience the full impact of the pandemic as well as the measures to curb it.
“It is important to note that while the fiscal implications will be significant over the short to medium term, the unorthodox policies rolled out to support the pandemic-hit economy are positive for Malaysia’s overall credit profile over the long term,” it said.
According to MARC, the “stable” outlook reflected its expectation over broad economic policy continuity.
The change in government will be maintained and economic and monetary management will remain proactive and practical in the face of the pandemic.
“It also reflects our expectation that Malaysia’s external position will remain healthy as headwinds rise.
“We are nevertheless cautious about the outlook as the pandemic is still developing, with its attendant impact on oil prices.
“We also cannot discount the country’s uncertain political landscape,” added MARC.