The country’s ratio of annual external liabilities due over the next year to reserves (the external vulnerability indicator, or EVI, has been significantly above the 100 per cent threshold for years.
KUALA LUMPUR: It would take a significant deterioration of Malaysia’s (A3 stable) external metrics from current levels for the country’s credit profile to weaken, said Moody’s Investors Service .
Moody’s said this in its report, titled ‘Government of Malaysia: Credit profile relatively resilient despite external vulnerabilities’ yesterday.
The report said the country’s ratio of annual external liabilities due over the next year to reserves (the external vulnerability indicator, or EVI, has been significantly above the 100 per cent threshold for years.
“However, currency flexibility, prudent monetary policy and a large domestic institutional investor base buffer the impact of capital flow volatility, with large export proceeds and external assets acting as a further cushion,” it said.
The rating firm said since its assessment of Malaysia’s overall sovereign credit profile incorporated its vulnerability to capital volatility, trends in the EVI and the basic balance, its credit profile were relatively resilient to periods when such external volatility heightened.
“Other sources of credit risk would be a sharp growth slowdown or meaningful weakening in public finances,” it said.
Moody’s said neither factors deemed likely at this time. — Bernama