KUALA LUMPUR: Fitch Ratings, which affirmed Malaysia with an A- stable outlook recently, has also affirmed Malaysia's global sukuk trust certificates with the same outlook.
The trust certificates are issued by Malaysia Sukuk Global Bhd.
Last month the rating agency said Malaysia's rating of 'A-' reflects its strong net external creditor position, real GDP growth that remains stronger than the median of 'A' rated peers and a current account that is still in surplus although it has been narrowing.
"Malaysia's economy has been slowing, but real GDP growth on average is still stronger that the 'A' median which include countries like Poland and Israel.
"The rating remains constrained by structural indicators that are weaker than the 'A' median, and federal government debt and deficit levels that are larger than some of its peers in the 'A' rating category,"it said.
It expects the Malaysian economy to grow by 4 per cent in 2016 from 5 per cent last year.
Private consumption demand and continued spending on strategic projects by the government and state-owned enterprises are likely to support growth, countering some of the downside pressure from weak external demand.
It identified government debt and deficits as a weakness and expects the debt ratio to increase gradually over 2017-2018, but still remain below the authorities' self-imposed federal government debt ceiling of 55 per cent of GDP.
Government debt is likely to decline to less than 54 per cent of GDP at end-2016 from 54.5% at end-2015.
"However, this forecast includes the authorities' plan to transfer close to RM22 billion of federal government debt to the Public Sector Home Financing Board. "
For 2016, Fitch forecasts a slightly higher deficit of 3.2 per cent of GDP compared with the authorities' target of 3.1 per cent, mainly due to a less optimistic growth outlook than the authorities.
Federal government guarantees have stabilised at their 2013 levels and at end 2015 were at 15.4 per cent of GDP, it added.