by NUR HANANI AZMAN / pic by BLOOMBERG

MOODY’S Investors Service expects Malaysia’s credit profile to remain consistent with the A3 rating level based on current assumptions.

“We do not expect the Covid-19 pandemic to have a sustained negative impact on Malaysia’s economic model; as such, the current and any subsequent waves of infections will delay, but not materially hinder the economy’s eventual return to high growth rates.

“The authorities’ track record of effective macroeconomic policies, including prudent fiscal policies, has also continued to lengthen, despite ongoing noise in the political landscape,” it said in Credit Opinion titled ‘Government of Malaysia – A3 stable: Update following change in forecasts’.

Malaysia’s (A3 stable) credit profile is underpinned by its diversified, competitive and moderately large economy, ample natural resources and strong medium-term growth prospects.

The large pool of domestic savings supports the high government debt burden and lowers liquidity risk.

“Credit challenges include the government’s narrow revenue base, which limits fiscal flexibility in response to shocks such as the coronavirus pandemic, as well as political noise that may distract from policy priorities,” it added.