KUALA LUMPUR, March 27 (Xinhua) -- S&P Global Ratings has on Friday affirmed Malaysia's "A-/A-2" foreign currency and "A/A-1" local currency ratings with a stable outlook, as the rating agency remains confident on Malaysia's core credit strengths.
The global rating agency said in a statement that it expected Malaysia's core credit strengths, including its robust external position and highly credible monetary policy settings, would continue to support the rating following the recent aggressive decline in oil prices and unexpected change in government.
"Although we forecast a higher fiscal deficit this year owing to the stimulus measures and lower oil-related revenues, we expect the government to maintain its fiscal consolidation trajectory over the medium term," it added.
S&P also opined that the Malaysian new government would not deviate materially from its long-term fiscal consolidation path, despite the recent collapse in oil prices, along with substantial downside pressure on real GDP growth owing to the COVID-19 pandemic.
"We have revised our general government deficit forecast to 4.1 percent of GDP in 2020, versus our previous expectation of a 3.2 percent deficit," it said, adding that lower oil-related revenue and greater expenditure on stimulus measures would contribute in roughly equal measure to the higher deficit.
