KUALA LUMPUR – Malaysia’s domestic political risks, which have increased in recent years, have not adversely affected policy reform, Moody’s Investor Service said.
This is because the government has demonstrated commitment to its fiscal deficit reduction goals through past electoral cycles, Moody’s Sovereign Risk Group assistant vice-president and analyst Anushka Shah said
Commenting on the Barisan Nasional and Pakatan Harapan manifestos unveiled recently, she said their impact on sovereign credit will depend on how they are funded and whether they have a negative effect by delaying the government’s on-going efforts at fiscal consolidation.
“Economically, these programmes are likely to boost consumption over the near-term, but against the backdrop of Malaysia’ export driven growth, the impact is not likely to be material and could be offset by inflation,” Anushka said in a statement.
She said Moody’s rating assessment takes into consideration broader political risk for all sovereigns.
“We see political risk as being “low” for Malaysia, based on a moderate-probability low impact scenario,” Anushka said.