Positive Fitch ratings a relief
Published on: Thursday, July 02, 2015
Kuala Lumpur: The stable outlook status accorded by Fitch Ratings for the Malaysian economy is indeed a relief and gratifying to the country, says Asian Strategy & Leadership Institute and Centre of Public Policy Studies Chairman Tan Sri Ramon Navaratnam.The US-based ratings agency affirmed the country's long-term foreign currency rating at A- and revised upwards its outlook to stable from negative.It also affirmed Malaysia's long-term foreign currency issuer default rating (IDR) at 'A-' and local currency IDR at 'A'.
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Speaking to Bernama on the upgraded outlook, Navaratnam said the achievement should be credited to the government agencies such as the Economic Planning Unit, the Ministry of Finance and Bank Negara Malaysia.However, although the country has improved its economic management, he said there was still some weaknesses that needed to be addressed. "Our economic and fiscal margins are still too narrow for real confidence and comfort."For instance the budget deficit, the national debt, the personal debt and the balance of payments are all not well above and beyond, hence any unforeseen contingencies can upset the apple cart and our calculations and confidence," he said.Navaratnam said the government needs to structurally reform more to ensure sustainability and continuing good ratings from Fitch Ratings and other international rating agencies.
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"Most importantly, we need more domestic and international confidence in our longer-term socio economic and political outlook and resilience," he said.Meanwhile, RHB Research believed the ringgit would likely remain weak and hover around RM3.65- RM3.75-level, as foreign investors were likely to continue adjusting their portfolio ahead of the US interest rate increase.
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"While Greece could potentially vote itself out from the Eurozone and result in some volatility in the financial markets, its impact will likely be manageable and it was unlikely to derail the Eurozone's economic recovery," it said in a statement.Another research house, Affin Hwang Capital said it hoped international rating agencies (such as S&P, Moody's and Fitch Ratings) would favourably view the government's effort to reduce the fiscal deficit especially with the introduction of the Goods and Services Tax. "Both Standard & Poor's Ratings Services (S&P) and Moody's Investors Service (Moody's) maintained the country's long-term foreign currency issuer default rating outlook at stable and positive, respectively.Stay up-to-date by following Daily Express’s Telegram channel.
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