KUALA LUMPUR, Jan. 20 (Xinhua) -- Moody's Investors Service said Monday that the credit profile of Malaysia (A3 stable) is supported by its large, diversified and competitive economy, strong medium-term growth prospects compared with similarly rated peers and ample natural resources.
The rating agency said in its annual credit analysis that Malaysia's institutions have also demonstrated effectiveness in macroeconomic policymaking and financial supervision.
"Although government debt is moderately high, debt structure is favorable and the government has access to a large pool of domestic savings," it added.
However, the rating agency expects Malaysia's real gross domestic product (GDP) growth to remain at the lower end of its 2014 to 2018 range, averaging 4.5 percent over the next two years because of weaker global growth.
Moody's also said that balanced against these credit strengths are Malaysian government's narrow revenue base that limits its fiscal flexibility, challenges to further fiscal consolidation, and institutional weaknesses in control of corruption and governance.
"External vulnerability drives Malaysia's susceptibility to event risks because of sizeable external debt repayments relative to foreign-exchange reserves," it said.
The rating agency expects Malaysian government's fiscal deficit to average at 3.3 percent of GDP over 2020 to 2021, due to slower growth compared with the past decade, the abolishing of the goods and services tax that has narrowed the revenue base, and ongoing social spending needs continue to weigh on government efforts to further reduce deficits.
Overall, the stable outlook indicates that risks to Malaysia's rating are balanced, it added.
