Moody's Downgrades Malaysia Outlook
Moody's Investors Service on Monday downgraded Malaysia's sovereign outlook from "positive" to "stable", citing deepening economic woes from falling oil prices and global economic uncertainty.
In a statement, the ratings agency said the country faced slowing growth and world market factors that have "undermined Malaysia's external position, with large capital outflows, a falling current account surplus, sharp exchange rate depreciation and falling reserves."
Malaysia's economic outlook has been a source of major concern since oil prices plunged in 2014. Exports of oil and natural gas are a major source of earnings for the country.
The trouble has been compounded by a financial scandal involving Prime Minister Najib Razak, which has further rattled the country's markets.
The situation caused the ringgit to plummet, making it the worst-performing Asian currency last year.
Najib in October forecast slower growth of 4-5 percent in 2016 and announced measures to spur demand, but has insisted the economy remains on solid footing.
His government introduced an unpopular consumption tax last year to raise revenue and has rationalised fuel subsidies, but Moody's said those moves have had limited impact on the government's balance sheet.
Critics have been demanding that Najib explain allegations that massive sums went missing from deals involving state-owned company 1Malaysia Development Berhad (1MDB), and the revelation that nearly $700 million in mysterious deposits were made to his personal bank accounts.
The transfers were made shortly before a hotly contested election in 2013.
Najib's government calls the deposits "political donations" from foreign donors but has refused to specify the source, purpose, or ultimate fate of the money.
Both Najib and 1MDB have fiercely denied any wrongdoing.
Najib, who is also the finance minister, announced on Friday that the 2016 government budget released in October will be revised in light of the further deterioration of the global economic situation.
Source: Agence France Presse
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