KUALA LUMPUR: Fitch Ratings is likely to revert Malaysia’s ratings to positive within three to six months of the implementation of the goods and services tax (GST), said Kenanga Investment Bank Bhd.
Senior vice-president, economist Wan Suhaimie Saidie said this is possible following the expected prudent fiscal balance with the new tax system in place.
He said the government should impose the GST by July 1, 2014 to allow it to achieve a deficit of 3.1 per cent of gross domestic product (GDP) by 2015.
“We expect the government to impose the GST at a rate of between four to seven per cent,” he told a media briefing here yesterday.
Wan Suhaimie said if the government imposes the GST on July 1, 2014 with an initial rate of five per cent, it would boost fiscal revenue by about RM3 billion to RM4 billion for the whole of 2014, and this would help reduce the deficit by about 0.2 to 0.4 percentage point in 2014.
“Though it may weigh on GDP growth, we project the fiscal deficit may still narrow to 3.4 per cent in 2014. The impact would be more pronounced in 2015 as deficit is forecast to narrow further to 3.1 per cent,” he added.
Wan Suhaimie said if the government implements the GST on January 1, 2015, GDP growth would be more moderate as it has to absorb the negative impact of the GST.
“We can also expect to see the interest rate to be increased by 25 basis points and the impact on inflation would be more from the cost-push factor,” he said.
Implementing the GST in 2015 would boost the fiscal coffers by about RM7.1 billion to RM7.6 billion and lower the fiscal deficit further to 3.5 per cent of GDP, he added. — Bernama
Read more: http://www.theborneopost.com/2013/10/08/fitch-ratings-may-revert-malaysias-ratings-to-positive-after-gst-kenanga/#ixzz2h5ZGav92
No comments:
Post a Comment