Zeti: Fiscal stimulus still necessary

Published: 2009/10/20

THE fiscal stimulus is still necessary for both this year and next year to support the Malaysian economy, Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said today.

However, she did not elaborate whether Malaysia needed a new stimulus package on top of the two stimulus packages worth RM67 billion announced by the government late last year and earlier this year.

"Right now, the fiscal stimulus is still necessary both this year and coming to next year but of course it is not sustainable over the medium term and (therefore) the private sector has to respond and recover," she told reporters after officiating the 21st Federation of AFRO-Asian Insurers and Reinsurers conference.

Zeti said there was a need for sustainable growth over the medium term and the government would continue to create a conducive investment environment for the private sector.



"The economy has already shown signs of recovery (and) unless there's any further negative global developments, the current stimulus is already producing results and we are very pleased to see that private consumption is expanding," she said.

As for the ringgit, Zeti said the central bank does not intervene in the market as the market is in orderly condition with inflows and outflows in stable condition.

"Therefore, the need does not arise for central bank intervention."

"Only when we have excessive adjustments in any particular day that presents risks to these orderly market conditions, then the central bank comes in," she said.

Zeti said that even when there was some kind of volatility, generally the market has remained orderly.

"We have inflows and we have outflows, some days they are about the same so you see quite stable conditions and other days of course, either the inflow or outflow exceeds (the other) and therefore you have appreciation or depreciation," she said. - Bernama