Fitch Ratings said it is "more likely than not" to downgrade Malaysia's sovereign rating in its upcoming review in the first half of 2015 on the back of the country's negative outlook.
The government's revision of its fiscal deficit target from 3% to 3.2% of the gross domestic product (GDP) and the reduction of GDP growth forecast for 2015 to 4.5%-5.5% from 5%-6%, was a "reinforcement of the fact that dependence on commodities remains a key credit weakness for Malaysia".
The revisions also showed that the credit profile of the nation remains vulnerable to sharp movements in commodity prices.
While the Prime Minister has stated that fiscal reform and consolidation will continue, the upward revision of the fiscal deficit target, on account of the high share of revenues linked ot petroluem, which remains a structural weakness, highlights that further measures might be required to meet the fiscal consolidation target of achieving a balanced budget by 2020.
These factors are reflected in its 'negative' outlook on the rating of the country.
The negative outlook indicates that Fitch is more likely than not to downgrade the rating of the sovereign.
Fitch expects to review Malaysia's rating during the first half of 2015.
No comments:
Post a Comment