Budget 2017 to support growth amid slower fiscal consolidation: RAM Ratings

RAM Ratings expects Budget 2017 to remain supportive due to the weak external environment and slower gross domestic product (GDP) growth of 4.2 percent as compared with 5.0 percent in 2015.

"We therefore envisage the pace of Malaysia's fiscal consolidation to moderate in 2017, with a likely revision of the government's fiscal deficit target of 2.7 percent of GDP under its medium-term (2016/2018) fiscal framework," it said in a statement here.

To achieve its long-term fiscal balance target by 2020, the government would need to be more aggressive in its expenditure reduction or explore other revenue sources that had not been considered before, said Head of Sovereign Ratings, Esther Lai.

Although fiscal consolidation had slowed relative to the momentum in the 2009-2015 period, it was not expected to weigh on Malaysia's global- and national-scale sovereign credit ratings of A and AAA, respectively, said the rating agency.

'The slower pace of fiscal consolidation, driven by weaker revenues, is cyclical in nature," it added. -- Bernama