'Malaysia has manageable debt'

FOREIGN ratings agencies are unlikely to downgrade Malaysia which has "manageable" debt and commitment to reducing fiscal deficit, a senior economist said.

Ratings Agency Malaysia (RAM) chief economist Dr Yeah Kim Leng said at 53.5 per cent, Malaysia's debt--to-GDP (gross domestic product) ratio is considered moderate.

The government is committed to cutting deficit to 4.7 per cent from 5.1 per cent.

"While higher government spending does pose a risk, after the elections this should consolidate," Yeah said after RAM's annual general meeting yesterday.

He was commenting on Standard & Poor's (S&P's) recent negative outlook on Malaysia due to high government spending in election year.

Yeah said with continued growth in the economy, price stability and full employment, a downgrade is unlikely.

A downgrade in S&P's "A-" rating of Malaysia could hamper its ability to get loans as well as higher cost of borrowings.

However, Yeah pointed out that this was not the case in recent downgrades of other countries' ratings.

Meanwhile, executive director and deputy group chief executive officer Datuk Govindan Kunchamboo said RAM is looking at growth prospects in other Asean countries as well as introducing new products locally.

The new products include covered bonds or new bonds backed by loans, and bonds for local government.

Govindan will become RAM chief executive officer with the retirement of Tan Sri C. Rajandram on June 1 2012.

RAM maintains a target of between RM80 billion and RM85 billion bonds issuances this year.


By Presenna Nambiar, btimes.com.my