S&P Global Ratings today maintained Malaysia's credit ratings at A- with stable outlook, on the basis of steady economic growth and the new government's emphasis on strengthening its fiscal position.

S&P sovereign and international public finance ratings senior director Tan Kim Eng said Malaysia's growth will be well supported and investments are likely to pick up after a period of slowdown following the 14th general election.

"We believe that given the government's focus on maintaining its budgetary prudence, even though there is a lot of spending to come as a result of electoral promises, I do not believe that the fiscal position will deteriorate," he said at a media briefing on S&P's Asean Credit Spotlight series in Kuala Lumpur today.

Tan noted that the recent general election has introduced a significant shift in the political make-up of the government. However, investors have come to believe that the government would stay and be relatively stable.

"For the first time since independence, we have a government where Umno does not play the leading role or any role.

"So naturally that creates a significant amount of political uncertainty, because people do not know what the new government will come up with, whether it will be stable, or whether it will continue the kind of policies that investors generally have been used to over the years.

"I think as a rating agency, we are heartened to see that the government is placing quite an attention on trying to bring the fiscal balance sheet back into (a healthy) position, and we also see the government is quite welcoming of investments by foreign investors," he pointed out.

Meanwhile, S&P economist Vincent Conti said austerity measures would be a big part in Malaysia's Budget 2019 announcement in November.

"There will be some challenges in terms of revenue after the goods and services tax (GST) was scrapped. The sales and service tax (SST) which was put in place could not fully recover the loss of it.

"Of course, the higher oil prices have helped to buffer some of the impact, but what we are seeing from the government is a commitment to more austerity," he added.

Conti noted that fiscal deficit would be broadly stable despite the loss in revenue after the GST was scrapped.

The GST, which was introduced in 2015, was zero-rated in June this year.

- Bernama