Malaysia ranks highly among developing countries for showing institutional strength which covers areas such as political stability and better bureaucracy in the International Monetary Fund (IMF)’s index.

The index measures institutional strength ranging from zero to 100, with higher scores indicating better political stability, better bureaucracy, fewer conflicts and less corruption.

Malaysia charted scores in excess of 70, placing the country way ahead of Indonesia, India, the Philippines and even China, which also featured highly in the rankings, according to IMF in its regional economic outlook for Asia and the Pacific.

The report said countries which exhibit greater political stability stemming from government unity, a strong Parliament and popular support as well as less corruption and better bureaucracy are more likely to resist the temptation to expand public spending during dire times.

The Washington-based agency said this would lead to more fiscal space for counter-cyclical fiscal policies during downturns as a result.

The IMF added that distortive food and energy subsidies, which impose a direct fiscal cost of more than two per cent of GDP per year in China, Indonesia, South Korea, Malaysia and South Asia could be gradually phased out.