RTTNews - Monday, Moody's Investors Service said in a special comment that the Malaysian government's intensification of its recent structural reforms supports the stable outlook on the A3 sovereign rating.
Anand Mitra, lead sovereign analyst for Malaysia said the conclusion was based on the observation that recently announced reforms would result in a significant dilution of the nation's 38-year-old 'New Economic Policy' and will also advance the investment liberalization agenda further than anything attempted in recent years.
Although specific fiscal strategies and policy reforms to limit and reverse the growing overhang in government debt are still being formulated, the Najib administration's unfolding structural reform program is timely, Mitra said.
The analyst said if the reforms are implemented effectively alongside fiscal policy adjustments, they could re-shape the country's medium-term competitiveness, growth potential and the overall sovereign creditworthiness.
At the same time, the main risk to implementations arises from local politics. If the adversarial relationship between the government and the opposition leads to legislative or policy gridlocks, then the private sector's response to growing investment opportunities could be muted, Mitra added.
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