KUALA LUMPUR: MARC Ratings has affirmed its unsolicited public information sovereign rating on Malaysia at AAA with a stable outlook based on the rating agency’s national rating scale.
“The AAA rating reflects Malaysia’s credit strengths, including an open and increasingly diversified economy, sound monetary policy, a resilient financial sector, and continued progress in structural and institutional reforms,” the rating agency said in a statement.
MARC Ratings said Malaysia’s economic growth remained resilient in 2025 despite external uncertainties and is expected to continue into 2026, supported by stronger foreign investment, resilient household spending and a stable labour market.
“Malaysia’s monetary policy remains a core credit strength, sustaining price stability and supporting economic growth,” it said.
It noted that headline inflation remained low, averaging 1.4% year-to-date (YTD) as at November 2025 (2024: 1.8%).
Malaysia’s external position also remained strong, supported by consistent current account surpluses, adequate international reserve buffers and a low proportion of foreign currency-denominated public debt, it said.
The ringgit strengthened about 8% YTD as at end-November 2025, reflecting contained external pressures.
The domestic financial system remains resilient, backed by strong capital buffers, ample liquidity and contained credit risks, with the total capital ratio at 18.2% as of mid-2025 and the net stable funding ratio above 115%, well above regulatory requirements.
“Bank Negara’s policy easing through a lower Statutory Reserve Requirement and reduction in the Overnight Policy Rate has helped sustain credit flows and lower funding costs amid global uncertainty,” MARC Ratings said.
Despite these strengths, MARC Ratings said credit challenges remain, with public debt and deficit levels still elevated.
While fiscal consolidation is progressing under the Public Finance and Fiscal Responsibility Act 2023 and the deficit is expected to narrow gradually, achieving targets under the 13th Malaysia Plan will hinge on consistent policy execution and effective implementation.
The stable outlook reflects MARC Ratings’ expectation that Malaysia will sustain healthy economic growth, continue improving fiscal efficiency, and make further progress in addressing structural constraints, including broad-based subsidies, revenue leakages and elevated public debt.
“The outlook also assumes continued political cohesion, as the pace and effectiveness of fiscal and institutional reforms remain closely linked to policy continuity and implementation capacity
“Looking ahead, key priorities for strengthening Malaysia’s credit profile include continued improvement in fiscal metrics while moderating debt accumulation through sustained fiscal consolidation efforts and ensuring the timely delivery of planned economic targets.
“Conversely, failure to meet fiscal consolidation goals or economic targets as planned could weaken the country’s credit profile,” MARC Ratings said.
