Credit rating agency Moody's Investors Services has forecasted that Prime Minister Najib Abdul Razak will continue to helm the government until the next general election.

Even if a change of leadership occurs, senior analyst Christian de Guzman said the next prime minister would also be someone from the ruling coalition BN.

Passing of the baton, he added, does not mean a "wholesale change" in their assumption as in the opposition coming into power.

The analyst noted that the opposition, which is fractured, appears unable to consolidate forces and capitalise on the pressure mounting on the current administration.

"This is why we think the BN government will continue through to the 2018 general election," de Guzman said in a media roundtable briefing to journalists in Kuala Lumpur.

Meanwhile, de Guzman admitted that the agency’s ratings do take into account the country’s political situation.

“Our report outlined the rationale behind the outlook revision a couple of months ago, in our assessment of political risk. We did increase that assessment, we acknowledge the worsening of political risk in Malaysia,” he said.

Moody’s, however, also acknowledged that the pressure on the prime minister has only had limited impact and even then, solely on policies.

“Over the past couple of years, we've seen fiscal reforms despite the emergence of political risk,” he added.

Less contingent risks

Meanwhile, asked whether current investigation by foreign authorities into 1Malaysia Development Bhd (1MDB) would be a factor in the agency’s future ratings, de Guzman said he believes the strategic investment arm currently poses less contingent risks to the government than it did six months ago due to the progress of its debt rationalisation plan.

“We don't see 1MDB as a systemic risk to public finance or the banking system. In the current context, it poses less of a risk.”

He, however, admitted that the development related to 1MDB had led the agency to lower its assessment on the country’s institutional strength.

“Having said that, the overall rating did change the outlook from positive to stable,” he said.

Meanwhile, asked to comment on Bank Negara governor Zeti Zakhtar Aziz whose term will end next month, de Guzman admitted that a change of leadership for the post of Bank Negara governor does pose some element of risk.

He, however, pointed out how there is always a political element to the appointment of central bank governors in most countries.

“In AAA-rated countries, the appointment is by political bodies. It's too early to tell whether someone appointed from outside the bank or from within will behave in a certain way,” he said.

There has been talk that Finance Ministry’s Irwan Serigar Abdullah would be named as Zeti’s successor. Irwan currently also sits on the 1MDB board of advisers.