KUALA LUMPUR: MARC Ratings Bhd has assigned the state of Kedah a sub-sovereign credit rating of AA- with a stable outlook under its sub-sovereign rating scale.
The rating reflects Kedah’s growing economic prospects, driven by a strengthening industrial sector and its overall sound fiscal management, the agency said.
“Nonetheless, Kedah’s revenue mobilisation and debt levels have room for improvement,” it said in a statement.
MARC said Kedah’s economy has maintained steady growth, with real gross domestic product (GDP) reaching RM51.8 billion in 2023 and averaging 3.0 per cent growth between 2019 and 2023.
It said although the state’s economic size is relatively small, accounting for 3.3 per cent of Malaysia’s GDP, Kedah holds strategic importance as the nation’s top rice producer and benefits from spillover effects from Penang’s growing high-tech industry.
“On the fiscal front, Kedah has demonstrated consistent expenditure prudence despite constrained revenues,” it said.
Between 2019 and 2023, Kedah recorded a modest but positive average fiscal surplus of 0.1 per cent of GDP.
According to MARC, this surplus enabled the state to gradually build up its reserves, with consolidated funds rising to RM474.5 million in 2023 from RM74.6 million in 2018.
“Kedah’s debt profile is elevated but remains manageable given ongoing federal transfers. The state has one of the highest debt-to-GDP ratios among Malaysian states, and one of the lowest
consolidated funds-to-total debt ratios.
“However, a significant portion of this debt is tied to water infrastructure projects, and ongoing restructuring efforts with Pengurusan Aset Air Bhd are expected to ease this credit burden over the medium term,” it said.
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