Malaysia’s Global, ASEAN Sovereign Ratings Remain Intact - RAM Ratings

KUALA LUMPUR, Nov 3 (Bernama) -- Malaysia’s respective global and ASEAN-scale A2 and AAA sovereign ratings remain intact as growth is expected to stay resilient at 4.9 per cent in 2019, said RAM Rating Services Bhd. The rating agency viewed the 2019 Budget, tabled by Finance Minister Lim Guan Eng in Parliament Friday, as a targeted approach to supporting growth, while ensuring that the country’s fiscal position remains manageable. “The ratings are also supported by the government’s commitment to narrowing the country’s fiscal deficit, backed by new revenue sources and cost-containment measure,” it said in a statement Friday. RAM expects Malaysia’s economic to grow by 4.9 per cent this year. In the 2019 Budget, the allocated development expenditure of RM54 billion (US$1 = RM4.16) or 3.5 per cent of gross domestic product is significantly higher than the 2010-2017 average of RM44.4 billion, said RAM. “The greater allocation underlines the de-emphasising of off-balance-sheet financing for big-ticket infrastructure projects. “This move improves transparency and will stem the build-up of the government’s contingent liabilities. This is a step in the right direction towards alleviating the overall debt service burden in the long run, as the government’s cost of financing is cheaper than government-guaranteed debts,” it added. Meanwhile, RAM said the restructuring of retail fuel subsidies would limit the future growth of the government's operating expenditure. In 2019, operating expenditure is set to be 10.4 per cent higher at RM259.9 billion (17 per cent of GDP). RAM viewed the government's effort to widen its revenue base over the longer term as a positive move. This includes revenue associated with fees and licences, the imposition of an excise tax on sugary drinks, ongoing tax reforms and the government’s intention of elevating dividend receipts from its investee companies. “The announcements on such revenue measures are commendable and highlights the government’s commitment to maintaining its fiscal position despite potentially adverse political implications,” it said. -- BERNAMA