Moody’s Investors Service said Malaysia needs a smaller budget deficit and faster economic growth to earn its first credit rating upgrade since 2004. Standard & Poor’s on July 31 raised the outlook on the Southeast Asian nation’s foreign currency borrowings to positive from stable, which means the company’s first upgrade on Malaysia since 2003 is more likely – reported Bloomberg.
Moody’s however said today a stable outlook is more appropriate. Malaysia’s government, which has spent more than it earns for nine straight years, plans to maintain a budget deficit this decade to fund a $58 billion development program. Second Finance Minister Nor Mohamed Yakcop in June argued that foreign investment, economic growth and the state’s ability to repay debt weren’t factored into the nation’s credit ratings.
Malaysia’s government plans to post a deficit of 3.4 percent or less of gross domestic product until 2010, Yakkop said on July 10. The government expects the economy to expand 6 percent this year after growth of 5.9 percent in 2006.
On July 31th 2007, Standard & Poor’s left the rating on Malaysia’s foreign currency debt unchanged at A-, the fourth-lowest investment level. Moody’s rates Malaysia’s foreign currency long-term debt as A3, the equivalent level.
It would be interesting to see how on earth can the government spend less to decrease the budget deficit when the premier Badawi has been promoting one mega-project after another, starting with IDR in southern region of Peninsular Malaysia to NCER in the northern part and now he’s getting ready to launch another one in the eastern part of Kelantan, though on a smaller scale as Kelantan is governed by opposition party.
Looking at the pattern of how Badawi going around the nation promoting new projects one wonders in amusement how could the premier who are known to often fall-asleep even on official functions could suddenly wide awakes giving away all the goodies. The premier could be flying off to Sabah and Sarawak to hand more good news to the locals in the last effort to fish for votes before calling the next general election.
Nevertheless in order to put the chart to shows smaller deficit, the government needs to either increase exports or reduce imports but it’s easier said than done. Artificial figures could do the trick though.
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August 2nd, 2007 by financetwitter
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Comments
Well, i understand that we need their support to help ‘promote’ Malaysia. But i think we shall have and keep our own policy. Why? because we know our country better than anybody else. No doubt that a view from different angle might produce different opinion, but we shall be firm with our stands. Our Bank Negara is comfortable with the economic condition. The Ministry of Finance(MoF) also confident with our growth plan. Rakyat does not complain much (as long as there’s no petrol hike). So, the indications pointing to a good direction. Bear in mind that we learnt from the currency crisis…
you’re absolutely right pj-investor that malaysia should have their own policy as she knows her own country better than anyone else … no doubt about that …
but there’s a pre-requirement to that – only if the best-brains are put to run the country to produce maximum benefits with good governance … else it’s hard to justify why the country is lagging despite given the rich resources, one after another …
malaysian people are used to complain only when they’re being pinched (just like the previous petrol hike) but then it’s just a temporary cries … after that everyone forgets and back to their normal life until the next time they’re being pinched again …
are you comfortable with the current economy? if yes, congrats as you’ve found a good government who can take care of your future …
cheers …
stocktube
you’re absolutely right pj-investor that malaysia should have their own policy as she knows her own country better than anyone else … no doubt about that …but there’s a pre-requirement to that – only if the best-brains are put to run the country to produce maximum benefits with good governance … else it’s hard to justify why the country is lagging despite given the rich resources, one after another …malaysian people are used to complain only when they’re being pinched (just like the previous petrol hike) but then it’s just a temporary cries … after that everyone forgets and back to their normal life until the next time they’re being pinched again …are you comfortable with the current economy? if yes, congrats as you’ve found a good government who can take care of your future …cheers …stocktube
Well, i understand that we need their support to help ‘promote’ Malaysia. But i think we shall have and keep our own policy. Why? because we know our country better than anybody else. No doubt that a view from different angle might produce different opinion, but we shall be firm with our stands. Our Bank Negara is comfortable with the economic condition. The Ministry of Finance(MoF) also confident with our growth plan. Rakyat does not complain much (as long as there’s no petrol hike). So, the indications pointing to a good direction. Bear in mind that we learnt from the currency crisis…