KUALA LUMPUR • Malaysia is not facing a financial crisis, said central bank governor Zeti Akhtar Aziz as she addressed growing concerns about the country's fiscal health amid a slowing global economy.
But while it is not all gloom and doom, Tan Sri Dr Zeti reminded businesses and people that they must make adjustments in the current environment.
"Our country is not heading towards a crisis," the governor of Bank Negara Malaysia said in an interview with The New Straits Times (NST) published yesterday.
"The reason why I can confidently say this is because we have had growth of about 5 per cent for several years now. We also have a strong financial system, and a high level of reserves," she added.
Malaysia's fundamentals remain strong, noted Dr Zeti, who has been central bank chief since 2000.
"We have a surplus in our current account, a low level of unemployment, we have a high level of savings and our level of foreign debt is relatively low," she told NST.
Asked about the ringgit's sharp fall in recent months, making it the worst performing currency in Asia, Dr Zeti pointed out that the Malaysian currency was not the only one hit.
"Most of it is beyond our control. This is evident from the fact that the dollar has strengthened against more than 120 currencies."
She also said that while some US$28 billion (S$39 billion) had flowed out of the country since September last year, US$60 billion in foreign funds had flowed into the country between 2009 and last year.
Still, the central bank chief acknowledged that in this "very challenging period that we have been able to manage so far", adjustments are needed all round.
"We can't always have good times," she said.
"Everyone has to adjust. Individuals need to learn how to conserve and economise," she said.
Adjustments may mean families foregoing overseas holidays or educating their children in Malaysia rather than abroad. Those in financial distress can seek help on how to manage their debt.
Household debts, at 87 per cent of gross domestic product, had stabilised, and non-performing loans remained low at 1.5 per cent, she added.
"If we had not done all the things we did to strengthen our banking sector, to develop our financial markets and to diversify our economy, we would have been so much worse now," Dr Zeti said.
"We have not seen a widespread closure of businesses. Businesses may be scaling back; this is the reality of the environment. We should accept these realities and not be in the phase of denial," she added.
"But to say that we don't have strong fundamentals is also not correct. We have strong fundamentals, and these are the fundamentals that will allow us to ride out this rough period and bounce back to a better economic performance."
Malaysia took 18 months to recover from the 1997-98 Asian financial crisis, Dr Zeti said.
"Our track record has shown us that every time we have been set back, time and again, we have been able to bounce back. It is more than once. We bounced back, and we bounced back quickly."
