In a statement, finance minister Tengku Zafrul Aziz responded by calling the result a “testament to the government’s strong fiscal discipline and robust medium-term growth prospects, on the back of earnest Covid-19 containment measures”.

He said it demonstrates the rating agency’s confidence in Malaysia, noting that more than 220 negative ratings actions have been made by various agencies since the onset of the pandemic.

Moody’s said their decision to maintain Malaysia’s rating was based on the country’s diversified and competitive economy, which they said will underpin strong medium-term growth.

The agency also noted that macroeconomic policymaking institutions have been credible and effective, which contributes to economic resiliency and helps support the economy’s debt carrying capacity.

Tengku Zafrul said that the RM305 billion worth of stimulus measures announced by the government are projected to improve the country’s gross domestic product (GDP) by up to 4%, setting the country on track to reach its growth target of 6.5-7.5% in 2021.

He added that the national vaccination programme would also assist in this continued economic recovery of the country, with the expectation that 80% of the population will be vaccinated by the first quarter of next year, breaching the threshold needed for herd immunity.

He said the government “remains committed to medium-term fiscal consolidation as well as ensuring fiscal sustainability,” and expects Malaysia’s fiscal deficit to be among the lowest in the A-category, with the aim to reduce it to 5.4% of the country’s GDP in 2021 from 6% last year.

In December, another credit rating agency, Fitch Ratings, downgraded Malaysia’s sovereign rating from “A-” to “BBB+”, with an improved outlook from “Negative” to “Stable”, driven by the negative impact of the Covid-19 pandemic on the country’s fiscal position and the ongoing domestic political situation.