KUALA LUMPUR: Malaysia may see a credit rating upgrade by mid-2026 if fiscal gains continue, according to Maybank Research Pte Ltd.
The research house expects one positive rating action from either S&P, Moody’s, or Fitch, provided Malaysia sustains fiscal outperformance in 2025.
Currently, Moody’s and S&P rate Malaysia at “A3/A-,” while Fitch assigns a lower “BBB+,” all with stable outlooks.
Fiscal discipline has improved, with the budget deficit narrowing from 6.4 per cent of GDP in 2021 to 4.1 per cent in 2024.
The government aims to trim it further to 3.0 per cent by 2027. However, public debt is expected to stay at or above 60 per cent of GDP unless growth exceeds expectations.
Maybank Research forecasts RM164 billion in gross Malaysian Government Securities (MGS) and Government Investment Issue (GII) issuances in 2025 to fund an RM80 billion deficit and RM83.5 billion in debt refinancing. The US$1 billion foreign currency bond maturing in April is assumed to be refinanced in US dollars.
Rising tax revenue and fiscal prudence will be key to securing an upgrade. – BERNAMA
