PETALING JAYA: The Finance Ministry has refuted reports of a possible credit rating downgrade, saying it is baseless as the Government is committed to ensuring its debt levels remain below 55% of gross domestic product (GDP).
The ministry said in a statement that debt levels were expected to go down to about 53% of GDP this year.
The ministry was responding to UK-based advisory firm Oxford Economics, which was quoted by the Nikkei Asian Review on Monday, that said the country was at risk of a downgrade as debts from state fund 1Malaysia Development Bhd mounted.
In a statement, the ministry said the Government was committed to ensuring national debt levels would not exceed 55% of GDP.
As at end-2015, the Government’s debt stood at RM630.5bil or 54.5% of GDP. Out of this, 97% consisted of domestic debt. Thus, Malaysia’s exposure to foreign exchange fluctuations remains low.
Meanwhile, the Government’s deficit levels stood at 3.2% as at end-2015, and is expected to reduce further to 3.1% as at year-end.
The Government will continue with its fiscal consolidation measures until it achieves a balance budget by 2020.
On Monday, Oxford Economics said Malaysia could be at risk of a credit rating downgrade, weighed down by debts at a state fund. Foreign investors’ interest in the stock market has weakened despite inflows into regional markets.
According to the report, Malaysian public debt swelled to 54.5% of GDP last year, up from 40% in 2008 and near a state-imposed ceiling of 55%.
The report noted that the rate is the highest since 1992 and far above Indonesia’s 29% and Thailand’s 31%.
Original Source: The Star