KUALA LUMPUR (July 14): Moody's Ratings has affirmed Malaysia's long-term local and foreign currency issuer ratings at A3 with a stable outlook amid a diversified and competitive economy, strong medium-term growth prospects, abundant natural resources and deep domestic savings, according to the Ministry of Finance (MOF).
In a statement on Tuesday, MOF noted that Moody's also expects the country's economy to outpace all other A-rated peers in 2026 despite geopolitical tensions in West Asia, volatile global energy prices and softer external demand.
These factors, together with the country's large domestic investor base, continue to support the government's financing needs, mitigate liquidity risks and keep borrowing costs at moderate levels, following Moody's latest periodic review of Malaysia's sovereign ratings, the ministry said.
Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim said the assessment underscored the resilience of the Malaysian economy and progress made in strengthening fiscal discipline, improving governance and broadening the revenue base.
"The work of reform is neither easy nor complete. This assessment should strengthen our resolve, not invite complacency. Much remains to be done to ensure that sound economic management is felt in the incomes, opportunities and daily lives of the rakyat," Anwar said in the statement.
He added that amid heightened geopolitical tensions and continued market volatility, Malaysia must preserve domestic stability, policy certainty and reform momentum while strengthening the foundations for sustainable growth.
MOF, in the statement, noted that government revenue reforms introduced since 2023 have sufficiently broadened the tax base to support gradual fiscal consolidation, despite higher subsidy spending stemming from elevated global energy prices and increased development expenditure under the 13th Malaysia Plan (2026-2030).
The ministry said Moody's also cited Malaysia's strong institutions, track record of effective macroeconomic policymaking, favourable domestic funding conditions and broad macroeconomic stability as key credit strengths.
The rating agency's stable outlook reflects balanced risks to Malaysia's credit profile, said MOF, adding that stronger growth and faster fiscal consolidation could support higher revenue generation, lower debt levels and improved debt affordability.
“The Madani government remains committed to the fiscal objectives prescribed under the Public Finance and Fiscal Responsibility Act 2023 (Act 850). It will continue to broaden the revenue base, improve expenditure efficiency, strengthen fiscal transparency and better target subsidies while protecting the welfare of the rakyat,” the ministry added.