Malaysia will honour debt obligations, says Zeti

KUALA LUMPUR: The Team of Eminent Persons has given an assurance that Malaysia will honour its debt obligations under the new government and highlighted that the current political changes in the country are happening at “a very positive time”.

Tan Sri Zeti Akhtar Aziz, who is part of the five-member team, said Malaysia was experiencing a period of adjustment but it was also bolstered by a favourable economic environment such as higher global oil prices.

“Oil is currently trading at above US$70 per barrel, so there is some breathing space. Therefore, we need to take this opportunity to implement certain policies so that we will have an orderly adjustment.

“This is also taking into account the capability of institutions such as Bank Negara and the Finance Ministry,” the former Bank Negara governor told Bernama after attending briefing sessions with three international rating agencies.

Zeti separately met the rating agencies – Moody's Investors Service, S&P Global Ratings and Fitch Ratings – to discuss the current environment in Malaysia and provide clarity on the broad direction of policies going forward under the newly-formed government.

Among the issues discussed were those related to the goods and services tax (GST) and subsidies, and how Malaysia could meet its revenue requirements following the removal of this tax.

Zeti said the new policies were vital, such as increasing the disposable income of the lower and middle-income groups.

As market players see the commitment and capability of organisations like Bank Negara, the Finance Ministry and other agencies in executing necessary reforms, she said: “I believe that there is every potential for us to generate that confidence and we are going into bigger, better and brighter future.”

Citing examples of how Malaysia managed to come out from similar situations before, Zeti said prioritising main projects would be the key. “We have done this before, during Tun Dr Mahathir’s reign in the mid1990s.

“As a result of the many mega projects, our current account deficit of the balance of payments exceeded 10% of the gross domestic product and this has increased the country’s vulnerability.

“During that time, we adviced him to reprioritise the mega projects and stagger their implementation into the future.

“Within two years, the current account deficit of the balance of payments improved to 4.6% of GDP against more than 10% previously. We have done it before and we will do it again,” she said.