KUALA LUMPUR, July 1, 2015:
The rollout of the Goods and Services Tax (GST) has saved Malaysia from being downgraded from the Fitch A- rating, a PKR lawmaker said.
Kelana Jaya Member of Parliament Wong Chen, in a statement, said the RM15 billion to be collected from GST annually saved the Barisan Nasional government from the threat of downgrade but at the full expense of the rakyat.
“The rakyat is made to cough up RM15 billion extra to pay the mountain of debts the government created.”
Apart from the GST, Wong said the ending of the fuel subsidy was another reason Malaysia was not downgraded.
PKR,he said, was relieved Fitch maintained its rating of the Malaysian government at A- as a downgrade would have been severe and could have caused the ringgit to fall further.
The assessment, however, was “far from a ‘pat on the back’ for the ruling coalition as Fitch noted Malaysia’s fiscal position continues to remain weak”.
The costs of borrowings, Wong pointed out, remained the same at A-, with a minor improvement on outlook from negative to stable.
“In other words, the government has effectively dodged a debt bullet, but it is still far from a recovery.”
Wong believes that until the government seriously combats corruption and wastage, the ratings position of the country will not improve.
The rating, he stressed, was not an indicator of good governance.
Earlier today it was reported Fitch maintained Malaysian’s long term foreign currency issuer default rating at A- and local currency at A, revising its outlook from negative to stable.