THURSDAY, March 28, 2024
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Najib's return to power assures growth: Moody's

Najib's return to power assures growth: Moody's

The Barisan Nasional's retention of the federal government assures the continuation of Malaysia's pro-growth policy, says Moody's Investor Services.

 

It said the outcome supports a stable outlook for the sovereign and government-related issuers (GRIs) including Petroliam Nasional Bhd (Petronas, A1 stable).
Below is the credit outlook issued by the international ratings agency yesterday:
On May 5, Malaysia's (A3 stable) ruling coalition, Barisan Nasional, retained its majority in parliamentary election, winning 133 of 222 seats in the national legislature.
The opposition coalition, Pakatan Rakyat, increased its representation to 89 seats from the 82 it won in 2008, and, according to preliminary results, won the popular vote.
Barisan Nasional’s retention of government assures the continuation of Malaysia's pro-growth policy, an outcome that supports the stable outlook for the sovereign and government-related issuers (GRIs) including Petroliam Nasional Bhd (Petronas, A1 stable).
But at the same time, Barisan Nasional's populist fiscal agenda clouds the prospects for fiscal reform.
With growth policies intact, the government is set to continue, if not accelerate, development initiatives under its Economic Transformation Programme (ETP).
The ETP has been particularly successful in reviving private investment.
Since its promulgation in 2010, private gross fixed-capital formation averaged annual growth of 16.6 per cent during 2010-12, up from 2.9 per cent during 2005-09.
Budgetary support for household consumption has further bolstered domestic demand, providing a significant offset to the relative weakness in net exports, in view of Malaysia's heavy reliance on external trade.
Similarly, the election's completion and the additional fiscal transfers promised during the campaign should help sustain the momentum of investment and economic growth over the next two years.
Nevertheless, long-term sustainability of government finances is contingent on fiscal reform, where the prospects are not so clear given the underlying features of Barisan Nasional’s victory.
Though Prime Minister Najib Razak was sworn in on Monday, the opposition as of Wednesday had not officially accepted it, citing irregularities in voting as preliminary results revealed that the opposition had won the popular vote.
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