KUALA LUMPUR, Oct 13 — The government will continue to pursue fiscal reform initiatives to further strengthen the public finance framework towards long-term fiscal sustainability, said the Finance Ministry (MoF).
In a featured article in its 2024 Fiscal Outlook and Federal Government Revenue Estimates report released today, the ministry said the government will ensure that the growth momentum is continuously supported by strategic reforms.
The proposed fiscal reforms include the introduction of the Public Finance and Fiscal Responsibility Act and the enactment of the Government Procurement Act.
Also included are initiatives to broaden the revenue base and improve expenditure management by developing the Medium-Term Revenue Strategy, the Medium-Term Expenditure Framework, the Public Expenditure Review as well as pension and subsidy reforms.
The government will also pursue institutional reforms to further enhance governance and reporting. It said these reforms are tailored to the Madani Economy policy framework to drive economic momentum forward and strengthen fiscal position.
“This framework will provide the required thrust to propel Malaysia towards sustainable economic growth and prosperity as well as to institutionalise sound public finance, thus yielding a better rating.
“An improvement in rating will benefit the nation through increased foreign investments, reduced borrowing costs and enhanced economic prospects,” said the report.
Currently, Malaysia is rated at A3 by Moody’s, A- by S&P, and BBB+ by Fitch which carry a “stable” outlook.
According to these credit rating agencies (CRAs), while there are various drivers for the present rating, fiscal performance is emphasised as the most important element for Malaysia. It is cited as a credit weakness.
Malaysia’s key rating strengths identified by the CRAs include a diversified economy, resilient growth, overall predictable and stable institutions, an established and strong banking system, as well as low exposure to foreign currency-denominated government debt.
The ministry highlighted that the government will ensure that the growth momentum is continuously supported by strategic reforms to focus on the well-being of the rakyat, increase the competitiveness of businesses and sustain the growth trajectory towards strengthening the nation’s resilience.
