Fitch Ratings has revised Malaysia’s outlook to “negative” from “stable” with Long-Term Foreign and Local Currency Issuer Default Ratings (IDR) affirmed at A- and A, respectively.
The revision is supposed to reflect the rating house’s assessment that prospects for budgetary reform and fiscal consolidation to address weaknesses in public finances had worsened.
It explained: “Malaysia’s public finances are its key rating weakness. Federal Government debt rose to 53.3% of gross domestic product (GDP) at end-2012, up from 51.6% at end-2011 and 39.8% at end-2008. The general government budget deficit (Fitch basis) widened to 4.7% of GDP in 2012 from 3.8% in 2011, led by a 19% rise in spending on public wages in a pre-election year.” It further believed that it would be difficult for the Government to achieve its interim 3% Federal Government deficit target for 2015 without additional consolidation measures.
And it also said “Fitch sees risks even to the achievement of the agency’s 3.5% deficit projection, as this already factors in one percentage point of GDP of spending cuts. This leaves Malaysia’s public finances more exposed to any future negative shock.”
Malaysia is not looking good at all, does it?
Yesterday afternoon, I was in Menara Celcom in KL’s Jalan Raja Muda Abdul Aziz. I was the General Evaluator at the Celcom Toastmasters meeting and although their numbers were small, they made up for it by generating even more kilowatts of sizzling energy. I had expected a good meeting and I was not disappointed. I loved the speeches and evaluations and I was glad I could make it. My last visit was in December 2012 and so, I was glad I could make it even if it was seven months later. And I am happy to acknowledge that this club continues to impress. An 8 over 10 score for this meeting!
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