KUALA LUMPUR (Nov 1): Malaysia's gross domestic product (GDP) growth and revenue as tabled in Budget 2018 are skewed to the downside, as revenue continues to decline as a portion of GDP, says Moody's Investors Service.

The country's revenue as a share of the gross domestic product (GDP), which is projected to decline to 16.6% in 2018, would fall to levels among the lowest of A-rated sovereigns, Moody's said in a report today.

The ratings agency added that its own 2018 GDP estimate is at the lower end of the expected 5% to 5.5% relied on for the budget.

Last Friday, Prime Minister Datuk Seri Najib Tun Razak tabled the proposed budget, which targeted revenue of RM239.9 billion, up 6.4% from 2017.

Meanwhile, although the 2018 fiscal deficit target of 2.8% could be met given the supportive growth and commodity price environment, a lack of revenue reform in the budget and relying instead on the economy to boost income may undermine the government's objective of a balanced budget by 2020, Moody's added.

"Coupled with rising spending in the run-up to elections next year, this risks slowing the pace of deficit reduction," Moody's said in a research note today.

The ratings agency also noted that the government's debt burden, which is expected to be lowered to 51.5% of GDP next year, remains higher than the median of 40.9% for A-rated countries.

This supports its moderate rating on Malaysia's fiscal strength and constrains upward credit pressure, Moody's added.