KUALA LUMPUR: Prime Minister Tun Dr Mahathir Mohamad is puzzled with the potential downgrade of the country’s credit rating by rating agencies, following the government’s decision to rescue the ailing Federal Land Development Authority (Felda) and Tabung Haji (TH).
“The rating agencies say that giving RM6 billion to bail out a company is wrong and they may downgrade Malaysia, but when Malaysia owed RM1 trillion, they didn’t talk about downgrading,” he said during a press conference at Yayasan Al-Bukhary, here today.
He said the government had saved a huge amount of money by solving issues related to East Coast Rail Link (ECRL), Felda, TH and, the latest, Bandar Malaysia.
“I suppose rating agencies have their own way and criteria (in determining credit ratings), but the fact is, the previous government caused a deficit in the previous budgets, but they retained the rating.
“Now when we try to solve the problem, we are told it is a wrong move,” he added.
International rating agency Moody’s Investors Service said in a note that the government’s debt burden has reached above the median of A-rated sovereigns, and the bailout package of RM6.23 billion for Felda is credit negative for the country’s rating.
Meanwhile, global index provider, FTSE Russell is considering the possibility of dropping Malaysia from the FTSE World Government Bond Index due to concerns about market liquidity, which could lead a rating downgrade.
Commenting further on the ECRL, Dr Mahathir said he believed the government would be able to recover most of the investment or solve most of the problems related to the investment after the project’s renegotiation.
“We are looking to reduce the cost further and we have other means to reduce the cost along the way,” he said.
On the High Speed Railway (HSR) project, he reiterated that the government has two years to think about it after both Malaysia and Singapore governments agreed to postpone the project.
“The contracts (related to HSR) have not been given out and we have two years to think about it.
“Until we realign and work out the new way of having a HSR that is not too expensive, (only) then will we give out the contracts,” he added. — Bernama