On December 4, Fitch Ratings lowered Malaysia's credit rating from A- to BBB+ based on the impact of the new crown epidemic on the economy and political uncertainties.
The 2021 budget presented by the Minister of Finance on November 6 used extremely conservative budget expenditures to prevent credit degradation, rather than expanding the budget to face the epidemic and economic downturn.
Ironically, although Fitch believes that the deficit target (6% for this year and 5.4% for 2021) is feasible, it ultimately decided to downgrade Malaysia.
We can now say that we are throwing ourselves into a situation where we have fallen through. The budget is too austere to ensure economic recovery. On the other hand, because of credit degradation, our borrowing costs have increased, limiting our public investment opportunities to promote economic growth and create prosperity for all.
In fact, next year’s budget should be out of the box in the past to deal with the high economic costs of the epidemic. The budget should focus on the correct measures to save our economy, rather than passively cater to the arbitrary and opaque mechanism of rating agencies. The government missed a great opportunity and in the end it could only make Malaysian citizens pay the bill