The investment bank said currently both S&P and Moody’s rate Malaysia at A-/A3, while Fitch Ratings assigns one notch lower at BBB+.

It said all three agencies had a stable outlook on Malaysia during the last rating updates in February-June 2023 and both the positive and negative rating triggers were little changed.

“We think Budget 2024 reaffirms the government’s commitment to fiscal consolidation at a gradual pace targeting additional reduction in the deficit-to-gross domestic product (GDP) ratio,” it said in a research note.

However, Maybank IB said it still seems insufficient to build a strong case for a rating upgrade yet in a debt metrics angle.

“Unless one or more of the rating agencies decide to upgrade the institutional strength of Malaysia which can be very subjective, or tangible progress is made toward achieving some of the targets set under the Madani Economy framework on, for instance, competitiveness, growth and governance.

Maybank IB also stated that Malaysia’s public indebtedness has been higher than the single-A median which is closer to 40% of GDP.

“Debt affordability measured by the interest expense/revenue ratio is projected to drop to 16.2% in 2024 (2023E: 15.2%, 2022: 14%) as borrowing costs continue to rise while revenue growth plateaus,” it added.

On Friday, Prime Minister Anwar Ibrahim tabled Budget 2024, themed “Economic Reform: Empowering the People”.

The budget had an allocation of RM393.8 billion, the highest in the country’s history.