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Credit rating downgrade not expected

KUALA LUMPUR, 13 March 2009: The country’s widening fiscal deficit from 4.8% to  7.6% for 2009 is not expected to result in the downgrade of its credit rating as it is at an acceptable level in times of economic crisis, the Dewan Rakyat was told yesterday.

Deputy Prime Minister and Finance Minister Datuk Seri Najib Razak said the fiscal deficit was bound to increase following the RM60 billion mini budget and noted that the proposal by several opposition MPs for a RM100 billion mini budget would only cause the deficit to rise to an unmanageable level of above 10%.

“What is important for the short- and mid-term is to take steps to reduce the fiscal deficit,” he said during the debate on the mini budget.

According to Najib, Malaysia had a good track record in facing economic challenges, and he pointed out that the fiscal deficit was successfully reduced from 5.3% in 2002 to 3.2% in 2007.

He added that with the possible economic recovery given the prudent fiscal measures being taken, the government was confident that the deficit of 7.6% could be reduced to a much lower level.

Read more here.

This article first appeared on 12 March 2009 in under the title Widening deficit not expected to downgrade credit rating. Used with permission.

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