PETALING JAYA: The Ministry of Finance (MoF) met with representatives of the Fitch Ratings agency yesterday to convince them that the domestic economy is still on a stable growth path, underpinned by consistent policies under the 11th Malaysia Plan (11MP), according to Finance Ministry secretary-general Tan Sri Mohd Irwan Serigar Abdullah.

Among other things, Mohd Irwan said the government hoped to demonstrate the country’s resilience to Fitch — which in January said it “will more likely than not” downgrade Malaysia’s sovereign rating by end-June this year.

He said the country’s 5.6% gross domestic product (GDP) growth in the first quarter, export growth, and the RM260 billion development expenditure allocated under the 11MP (2016-2020) that will help spur growth the coming five years, should (all) be viewed positively.

“External trade is also growing, although there is a concern about current account balance of payment, but it is still positive and we hope to increase it,” he told reporters after the launch of the Rice Bowl Start-up Awards 2015 which recognises the best new start-ups in the Asean region.

“We have set up an export council to promote export. We are very positive with the launch of 11MP. We hope this will give positive indicators to ratings agencies and so on to look on the positive side of what we are doing to make sure the economy is growing in a sustainable manner,” he added.

Fitch, which had expressed concern over Malaysia’s narrowing current account surplus, could not be reached for comment at press time. 

In March, Fitch Asia-Pacific head Andrew Colquhoun said there is more than a 50% likelihood of a rating cut and that Malaysia’s credit rating sat “more naturally” in the BBB range. 

Malaysia’s current A- rating is the lowest of the upper medium investment grade rating. A one notch downgrade, should it happen, will put ratings at BBB+ which is the highest of the lower medium investment grade.

Fitch in early January this year said it views debt-laden 1Malaysia Development Bhd as a close contingent liability of the sovereign due to the nature of its operations and leadership, as well as explicit sovereign guarantees of some RM5.8 billion of the entity’s RM42 billion debt.

This article first appeared in The Edge Financial Daily, on June 3, 2015.