Jun 10, 2009

Another Rating Downgrade

FITCH Ratings has cut Malaysia's long-term currency rating from "A+" to "A" due to concern over the country's growing budget deficit.

It also revised its outlook from negative to stable and maintained Malaysia's long-term foreign currency rating at "A-minus" with a stable outlook.

Fitch, in a statement yesterday, said that it expected Malaysia's budget deficit to increase to 7.7 per cent of gross domestic product (GDP) this year.

Last year, the budget deficit peaked when a RM67 billion stimulus package was announced to counter the effects of a global economic slowdown.

Fitch said that by next year, Malaysia's general government primary deficit of -6.4 per cent of GDP would be among the worst of all Fitch-rated sovereigns, after only Latvia, Bahrain, Ireland and Vietnam.

It noted that the ratio of Malaysia's revenues as a proportion of GDP was just 21.6 per cent, and that the ratio could worsen to 19 per cent by next year.

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