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 the country 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 Malaysia and the Ministry of Finance,” the former Bank Negara Governor told Bernama after attending briefing sessions with three international rating agencies today.

Zeti separately met the rating agencies Moody's Investors Service, S and 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.

“We need to support the overall growth of the economy; therefore, there is the importance of understanding what is the objective to be achieved with this kind of policies, which will generate further increases in (government) revenue,” she explained.

The first lady central bank governor said the Team of Eminent Persons would look at the overall management of the fiscal position, including the governance process, how decisions were made, and the level of transparency and disclosure.

Apart from Zeti, other members of the team are former Finance Minister Tun Daim Zainuddin, ex-Petronas President and Chief Executive Officer Tan Sri Mohd Hassan Marican, economist Prof Jomo Kwame Sundaram and billionaire tycoon Robert Kuok.

When asked whether the favourable performance by both the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) and the ringgit today were due to restored confidence in the economy, Zeti noted that “in times of uncertainty, there will be some volatility”.

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

Citing examples of how Malaysia managed to come out from similar situations before, Zeti said prioritising main projects will be the key. “We have done this before during the Prime Minister Tun Dr Mahathir’s reign in the mid-1990s.

“As the result of the many mega projects, our current account deficit of the balance of payments exceeded 10 per cent of the Gross Domestic Product and 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 declared. -- Bernama