Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz does not expect Fitch Ratings’ downgrade of Malaysia’s credit rating to hamper the government’s effort towards economic recovery next year.
The ratings agency revised Malaysia’s credit rating downwards from A- to BBB+.
“The Budget 2021 initiatives will continue the recovery momentum and are expected to contribute to the gross domestic product (GDP) growth target of between 6.5% and 7.5% next year,” he said in the Dewan Rakyat as quoted by Bernama.
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He noted that while many have considered the projection as too optimistic, Fitch has forecasted the local economy to expand 6.7%, which is in line with Malaysia’s own projection.
In fact, other institutions like the International Monetary Fund projects an even higher growth than that forecasted by the government at up to 7.8%.
“This generally shows confidence in the capabilities of the Malaysian economy to bounce back,” he said.
Tengku Zafrul was responding to Lim Guan Eng’s (Pakatan Harapan-Bagan) question on the government’s measures to address the rating downgrade by Fitch.
He added that no knee-jerk reaction was seen from the market since Fitch’s announcement.
“In this regard, the FBM KLCI and the ringgit remained stable and we recorded a high demand (the bid-to-cover ratio) which was 2.6 times more than the value of the offer for the 10-year MGII bonds (Malaysian Government Investment Issues) issued last week,” he said.
“And yesterday, I announced that eight venture capital fund managers from the US, South Korea, China, Indonesia and Singapore have agreed to invest in Malaysian start-up companies with an investment value of up to RM1.57 billion.”
In other words, investors’ confidence in Malaysia’s long-term capital market continues to be strong, said Tengku Zafrul.
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