Standard & Poor's Ratings Services (S&P) has affirmed the 'A-' long-term and 'A-2' short-term foreign currency sovereign credit ratings on Malaysia as well as the 'A' long-term and 'A-1' short-term ratings for the ringgit.
The outlook on the long-term ratings remains stable, S&P said in a statement, adding that it also affirmed the 'axAAA/axA-1+' ASEAN regional scale rating on Malaysia.
S&P said the sovereign credit ratings on Malaysia reflected the country's strong external position and considerable monetary flexibility, and that these strengths were weighed against Malaysia's less strong public finances.
In affirming the ratings, it said allegations in relation to 1Malaysia Development Bhd (1MDB) would not impede the ability of the executive branch to promote sustainable public finances and balanced economic growth.
"Similarly, we expect that the credibility of monetary policy and operational independence of Bank Negara Malaysia (BNM) will not diminish upon the retirement of long-standing Governor Dr. Zeti Akhtar Aziz in April," it said.
In the meantime, Malaysia's external position as a result of years of current account surpluses, is a key rating strength which S&P believes can withstand the slump in the oil and gas sector over the next two years.
"Our assumptions for Brent oil price per barrel (bbl) is US$40 for the remainder of 2016, US$45/bbl in 2017, and US$50/bbl thereafter," it said.
S&P's envisaged Malaysia's external indicators would remain broadly unchanged, given its projection that Malaysia's current account would remain in surplus.
For 2016, it said the depreciation of the ringgit should help the competitiveness of manufactured goods exports, offsetting some of the impact of weaker terms of trade for Malaysia's energy exports.
It also estimated the net general government debt to peak at about 49 per cent of gross domestic product (GDP) in 2015 but would decline modestly as growth remains buoyant.
It said Malaysia's general government fiscal position also carried contingent risks from its public enterprises and financial sector but "did not expect contingent liabilities of the weaker public enterprises to crystalise in a material manner on the central government balance sheet".
Although Malaysia's high household debt posed some risks, S&P believed that risks to the government were contained by the buffer of high banking sector capitalization and BNM's regulatory record.
"Our Bank Industry Country Risk Assessment for Malaysia is '4', with '1' being the strongest assessment and '10' the weakest," it said.
S&P's said that just over a quarter of Malaysia's ringgit-denominated government bonds were held by non-residents.
Although the foreign ownership could reduce, it said the country's sound budgeting, deep local capital market, floating exchange rate and 6.4 months of foreign exchange reserve coverage of current account payments, would attenuate the risks.
"We project Malaysia's GDP per capita to be just under US$10,000 as of the end of 2016," it said.
It also did not expect the weak energy prices to reduce real economic growth materially over the next 24 months, given that production of crude oil and liquefied natural gas accounted for only about 10 per cent of GDP.
"We project Malaysia's average annual growth in real GDP per capita to be 3.7 per cent over 2016-2019. Exports of manufactured goods and growth in private consumption and investment are likely to drive this expansion," it said.
S&P said the stable outlook was based on its expectation that Malaysia's strong external asset position and high monetary flexibility reduce the likelihood of a downgrade to less than one-in-three over the next 24 months.
Bernama
Mon Mar 28 2016
S&P said the stable outlook was based on its expectation that Malaysia's strong external asset position and high monetary flexibility reduce the likelihood of a downgrade. - File pic
Iran's supreme leader says Hamas leader's death will not halt 'Axis of Resistance'
The "Axis of Resistance", built up with years of Iranian support, includes Hamas, the Lebanese Hezbollah group, the Houthi movement in Yemen, and various Shi'ite groups in Iraq and Syria.
Putin says Russia willing to seek compromises between Iran and Israel
Russia is ready to help seek compromises between arch-foes Israel and Iran, President Vladimir Putin said on Friday, saying these would be difficult but possible.
What proposals will Russia push at the BRICS summit?
The proposal is also to establish a BRICS reinsurance company to allow uninterrupted shipment of goods and key commodities between members.
Indonesia's free meals plan in the spotlight as Prabowo readies for office
Prabowo calls the programme one of the main drivers of economic growth, eventually set to add an estimated 2.5 million jobs.
Astro AWANI's revamped English news website, AWANI International, launches on Oct 21
Astro AWANI's revamped English platform delivers in-depth global news and expert analysis to keep you informed on key developments.
Israeli strikes kill 33 people in Jabalia refugee camp in Gaza, medics say
Residents of Jabalia said Israeli tanks had reached the heart of the camp after pushing through suburbs and residential districts.
Liam Payne's ex-partner calls for media restraint after 'painful' death
Cheryl Tweedy used her statement to urge the media to remember they had a seven-year-old son, Bear, who could read the reports.
Analysts: Indonesia's strong MoF leadership team to boost investor confidence
Sri Mulyani Indrawati as head of Indonesia's Ministry of Finance is expected to instil confidence among investors.
Biden offers both a carrot and a stick to Israel as his term nears an end
Israel has frequently resisted US advice and has caused political difficulties for the Biden administration.
Putin says BRICS will generate most of global economic growth
Russian President Vladimir Putin will host a summit of the group in the city of Kazan on Oct. 22-24.
ISIS Malaysia's perspective of Budget 2025
An excellent rakyat-centric budget under the overarching principle of a caring and humane economy.
Budget 2025: Record increase in STR, SARA aid initiatives
The government will provide a significant boost to the Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA) initiatives next year.
Budget 2025: EPF contributions to be made mandatory for foreign workers – PM Anwar
The government plans to make it compulsory for all non-citizen workers to contribute to the Employees Provident Fund (EPF).
What policies to expect from Indonesia's new President Prabowo
Prabowo will be open to foreign investment, his aide has said, such as by offering investors management of airports and sea ports.
Budget 2025: Govt allocates RM470 mil to empower women's participation in PMKS
The Women's Leadership Apprenticeship Program will be intensified as an effort to produce more female corporate personalities.
Israel sends more troops into north Gaza, deepens raid
Residents of Jabalia in northern Gaza said Israeli tanks had reached the heart of the camp, using heavy air and ground fire.
Indonesia ramps up security ahead of Prabowo's inauguration
Prabowo Subianto will be sworn in as Indonesia's president on Sunday with Vice President-elect, Gibran Rakabuming Raka, also taking office.
Immediate allocation of RM150 mil for local authorities, DID to tackle flash floods
Datuk Seri Anwar Ibrahim said this allocation is intended to address the recent flash floods that hit the capital and several major towns.
Budget 2025: Sabah, Sarawak to continue receiving among highest allocations - PM
Sabah and Sarawak continues to be prioritised under Budget 2025, with allocations of RM6.7 billion and RM5.9 billion respectively.
NFOF will be operational in November 2024 with funding of RM1 bil
PM Anwar Ibrahim said NFOF will support venture capital fund managers to invest in startup companies with RM300 million set aside for 2025.