Moody’s analysis: PH campaign promises credit negative for Malaysia

Some campaign promises made by Pakatan Harapan (PH) would be credit negative for Malaysia’s sovereign.

Little is known about the opposition’s full range of economic policies, and its electoral pledges have lacked details that would allow for a full assessment of their budgetary and macroeconomic impact.

KUALA LUMPUR: Some campaign promises made by Pakatan Harapan (PH) would be credit negative for Malaysia’s sovereign if implemented without any other adjustments, said Moody’s Investors Service.

Moody’s sovereign risk group senior analyst Anushka Shah said these include a proposed abolishment of the goods and services tax (GST) which, without offsetting measures, would increase Malaysia’s reliance on oil-related revenues and, in the near term at least, narrow the government’s revenue base.

“Another policy pledge, the reintroduction of fuel subsidies, would also distort market-determined price mechanisms, with effects on both the fiscal position and balance of payments.

“Little is known about the opposition’s full range of economic policies, and its electoral pledges have lacked details that would allow for a full assessment of their budgetary and macroeconomic impact,” she said in a statement.

PH’s win in the parliamentary elections held on Wednesday marked uncharted territory for Malaysia as the country has never witnessed a transition of power away from the Barisan Nasional since its independence in 1957.

PH had won a simple majority of 117 parlieamentary seats at the 14th General Election (GE14) – enough seats to form a majority government.

Source: Malaysian Digest

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