Malaysia: PH’s campaign promises may be credit negative: Moody’s

• Global ratings agency Moody’s said on 10 May 2018 that a stunning election upset in Malaysia puts the country into uncharted territory and some of the opposition’s campaign promises could be credit negative for its sovereign debt rating unless there are adjustments.
• The ratings agency said that while “little was known” about Mr. Mahathir’s economic policies it was wary about the proposed abolishment of a goods and services tax and the reintroduction of fuel subsidies.
• Such campaign promises, “if implemented without any other adjustments, would be credit negative,” said Anushka Shah, a senior analyst at Moody’s. The moves would boost Malaysia’s reliance on oil-related revenue and narrow the government’s revenue base, she added.
• One-month currency forwards for the ringgit initially dropped as much as 2.7% to 4.0919 per dollar after the vote, closing 2.2% weaker on the day.
• But in early Asia-Pacific trading on 10 May 2018 the price firmed 1.3% to 4.0218, leaving it down about 0.9% from where it was trading before Malaysians went to the polls.

External Link: http://www.freemalaysiatoday.com/category/nation/2018/05/10/phs-campaign-promises-may-be-credit-negative-says-moodys/

External Link: https://www.ft.com/content/198cfde8-53ea-11e8-b3ee-41e0209208ec