Malaysia Credit Outlook Lowered to Negative by Fitch
By Michael Dwyer
Feb. 2 (Bloomberg) -- Malaysia’s credit outlook was cut to “negative” by Fitch Ratings, which cited an expected worsening of the country’s budget position this year and next.
Fitch lowered its outlook from “stable” on the Southeast Asian nation’s long-term local currency rating of A+, the same ranking as Slovakia and Chile. The outlook on Malaysian foreign- currency debt rating of A- was maintained as “stable.”
Malaysia’s budget deficit may rise to 5.7 percent of gross domestic product this year and to 7.4 percent in 2010, the ratings company said in a statement today. Less than 7 percent of Malaysian debts are foreign-currency denominated and more than 90 percent of ringgit-denominated debts are held locally, Fitch said.
“Fiscal weakness, manifested by high fiscal deficit and public debt, is always the sovereign’s major credit rating concern,” Franklin Poon, a Fitch director in Hong Kong, said in the statement. “The global economic headwinds will further reduce government revenues.”
Finance Minister Najib Razak is preparing a second stimulus package for Malaysia’s $181 billion economy as he attempts to avoid the domestic recession forecast by Citigroup Inc. and Standard Chartered Plc. Najib said Jan. 29 the combined cost of the two packages might send this year’s budget deficit beyond the targeted level of 4.8 percent of GDP.
Malaysia’s economic growth may “decelerate sharply” to 1.5 percent this year from an estimated 5.5 percent in 2008, Fitch said. The government is forecasting an expansion of 3.5 percent in 2009.
To contact the reporter on this story: Michael Dwyer in Singapore at email@example.com. Last Updated: February 1, 2009 22:51 EST