Moody’s assessment of Malaysia’s political risk reflects country’s creditworthiness — Analysts
KUALA LUMPUR: Moody’s Investor Service’s recent assessment of Malaysia’s political risk being low, speaks volumes of the country’s creditworthiness.
It is also a sign of the continuing fiscal consolidation and socioeconomic measures which has been put in place by the Barisan Nasional (Alliance) government since independence.
MIDF Research economist Izzuddin Yussof agreed with the assessment that Malaysia’s political challenges due to 1Malaysia Development Bhd (1MDB) are unlikely to affect the country’s fiscal position.
“From a rating perspective, it is important that fiscal consolidation continues. As long as the current government remains, it is unlikely that the fiscal consolidation plan will change,” he told Bernama.
On Thursday, Moody’s rated Malaysia’s political risk in affecting the country’s creditworthiness as very low despite the 1MDB issue. In a report on domestic political risks in Southeast Asia, Moody’s said rising political challenges haven’t yet translated into increased fiscal risk, although the pace of budgetary tightening has slowed.
“Our assessment of domestic political risk in Malaysia remains at ‘Very Low +’, reflecting our expectation of de facto one party dominance and, consequently, policy continuity,” it noted.
Izzuddin said the performance of oil prices will determine whether a balanced budget in 2020 can be achieved. He believed the government should be able to attain the balanced budget if the oil price rebounds to US$80 per barrel in 2020 as forecast by most analysts.
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