KUALA LUMPUR: Pakatan Harapan’s win in parliamentary elections held on Wednesday, marks uncharted territory for Malaysia, as the country has never witnessed a transition of power away from the Barisan Nasional since independence in 1957.
In a statement, Anushka Shah, Vice-President – Senior Analyst, Sovereign Risk Group, Moody’s Investors Service said little is known about the opposition’s full range of economic policies, and electoral pledges lacked details that would allow for a fuller assessment of the budgetary and macroeconomic impact.
“Some campaign promises, if implemented without any other adjustments, would be credit negative for Malaysia’s sovereign.
“These include a proposed abolishment of the Goods and Service Tax or GST, which, without offsetting measures, would increase Malaysia’s reliance on oil-related revenue and in the near term at least, narrow the government’s revenue base,” she added.
Anushka said another policy pledge, the reintroduction of fuel subsidies, would also distort market-determined price mechanisms, with an effect on both the fiscal position and balance of payments.