I am pleased with the announcement of Malaysia’s credit ratings by Fitch Rating Agency yesterday. Fitch has maintained our sovereign credit ratings and revised its Outlook on the Long Term Issuer Default Rating (IDR) from ‘Negative’ to ‘Stable’. This positive development is indeed a firm recognition that Malaysia’s economic and financial policy is on the right track and demonstrates the international marketplace’s confidence in our transformation programme to place Malaysia on a firm footing as we head towards high-income status in the year 2020.
We are steadfast in our resolve to maintain fiscal sustainability. In our commitment to this policy, we are determined to meet our annual budget deficit reduction targets, reducing our budget deficit to GDP from 4.8% in 2008 to 3.2% this year, leading to a balanced budget in the next five years. We have implemented the Goods & Services Tax, made effective 1st April 2015. This indirect consumption tax broadens and stabilises the Government’s revenue base. We have rationalised our subsidies across several subsidies, most significantly, our subsidy for oil. The net position in the Government’s revenue will be used to improve the rakyat’s welfare and economic prospects.
There are several concerns raised by Fitch, including our narrowing current account surplus, the possibility of expansion in our contingent liability due to 1MDB and our smaller external liquidy ratio. I can assure you this Government is taking firm steps in addressing these concerns.
We are determined to maintain our fiscal policy sustainability and to have in place the most firm economic foundation for our high-income ambition.
Dato’ Sri Mohd Najib
1st July 2015