Fitch cuts M’sia outlook on worsening reform prospects
(fz.com) – “Prospects for budgetary reform and fiscal consolidation to address weaknesses in the public finances have worsened since the government’s weak showing in the May 2013 general elections,” Fitch said in a statement.
Ratings agency Fitch cut its outlook on Malaysia’s sovereign debt to negative on Tuesday, citing gloomier prospects for reforms to tackle the Southeast Asian country’s rising debt burden following a divisive election result this year.
The revision from a stable outlook adds to concerns over Malaysia’s high debt pile at a time when the currency has been pressured by bond fund outflows and talk of the U.S. Federal Reserve ending its easy monetary policy.
Rival ratings agencies Standard and Poor’s and Moody’s both have a “stable” rating on Malaysia’s sovereign debt.
“Prospects for budgetary reform and fiscal consolidation to address weaknesses in the public finances have worsened since the government’s weak showing in the May 2013 general elections,” Fitch said in a statement.
“Malaysia’s public finances are its key rating weakness.”
The long-ruling Barisan Nasional coalition retained power in May elections, but saw its parliamentary majority weakened in a vote that exacerbated racial divisions in the multi-ethnic country.
Prime Minister Najib Razak, who could face a ruling party leadership challenge in October, has anounced no fresh steps to cut the fiscal deficit, such as a long-anticipated consumption tax or a reduction in the government’s heavy subsidies for fuel and food.
