Fitch Ratings has affirmed Malaysia's long term foreign-currency issuer default rating (IDR) at "A-" with a stable outlook.

The rating agency said in a statement Tuesday that the outlook is supported by solid economic growth and a net external creditor position built up from a record of current-account surpluses.

The affirmation takes into consideration both measures such as the rollback of the goods and services tax (GST) and the stated intention to reduce fiscal deficits and improve governance.

However, it noted, the strengths are offset by elevated government and private sector debt, and low per capita income and World Bank governance scores relative to rating peers.

The agency has also raised its estimate of Malaysian central government debt at end-2017 to around 65 percent of gross domestic product (GDP), from 50.8 percent, following the government's recognition that it will need to service a large share of explicitly guaranteed debt.

While Malaysian new government has moved ahead of many of its key election promises, notably repealing the GST and reintroducing fuel subsidies, Fitch views these measures as negative for the country's credit profile.

"The government aims to implement offsetting fiscal measures and has indicated its intention to contain the central government deficit. But there are risks to achieving this target," it said, citing lower economic growth, which could limit room for expenditure cutbacks as well as delays in implementing planned revenue measures.

Meanwhile, the rating agency expects the country's deficit to continue falling to around 2.5 percent of GDP by 2020 through a combination of subsidy rationalisation, further capital spending cuts, new revenue measures and better tax compliance.

The central government debt is likely to decline to around 59 percent of GDP by 2020, although the decline could be more rapid if the government chooses to sell off public assets and use the proceeds for debt reduction, it said.

It expects Malaysia's GDP growth to slow to 5.2 percent in 2018, 4.8 percent in 2019 and 4.6 percent in 2020, from 5.9 percent in 2017, as the government seeks to constrain recurrent spending in line with its narrower revenue base.

It also projects Malaysia's current account surplus to remain between 3 percent to 4 percent of GDP between 2018-2020, supported by higher oil-related exports and slightly slower import growth, which should counter our forecast moderation in exports of electronics.