PETALING JAYA: The acquisition of the four tolled highways has not been budgeted for and will likely exacerbate the government’s debt burden, said RAM Rating Services Bhd.
“Nevertheless, RAM expects the government to be cautious in raising debt for
this purpose, given its commitment to long-term fiscal consolidation,” said Esther Lai, RAM’s Head of Sovereign Ratings in a press release.
It said that from the sovereign’s budgetary perspective, the acquisition of the four tolled highways RAM’s ratings on Malaysia will also consider the possibility of fiscally onerous political considerations.
“All said, the eventual outcome of the proposed acquisitions will have to carefully balance Malaysia’s limited fiscal space, which is underscored by its elevated effective debt level (estimated at 65.7% of GDP as at end-2018),” Lai added.
While details have yet to be announced on the regulatory, legal and financial implications of such a move, RAM Ratings said it believes that the government will strike a balance between its toll-abolition plans and the potential implications for the debt capital market.
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