Highlight Zeti says govt election pledges should be fulfilled “within constraints” of public finance

Politics & Government 2013
Written by Chong Jin Hun of theedgemalaysia.com
Wednesday, 15 May 2013 18:54
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KUALA LUMPUR (May 15): Government election pledges made prior to
the polls on May 5 should be fulfilled "within the constraints" of public
finances, said Bank Negara Malaysia governer Tan Sri Dr Zeti Akhtar
Aziz today.
She said this is to ensure that government debt levels remain at
sustainable levels.
"The pledges have to within constraints," Zeti told reporters today
during a press conference to announce the country's first quarter 2013
gross domestic product (GDP) data.
She was commenting on news reports indicating that Barisan Nasional
will have to spend an estimated RM216 billion to fulfill its pledges over
the next five years.
Together with Federal Government debt of RM502 billion, the news
report by Nanyang Siang Pau said it will be difficult for policymakers to
reach a zero fiscal deficit target by 2020.
On the economy, Zeti said Malaysia's economy grew 4.1% in the first
quarter of 2013 (1Q13) as domestic demand growth mitigated the
impact of weaker exports.
She said domestic demand grew 8.2% while net exports fell 36.4%.
"Malaysia's GDP growth will be influenced by external demand in the remaining months of 2013.
"Growth will continue to be driven by robust domestic demand," Zeti said.
The domestic services sector grew 5.9% in 1Q13 while the manufacturing and agriculture industries expanded 0.3% and 6%
respectively.
The construction sector was up 14.7% while the mining industry contracted 1.9%.
Looking ahead, Zeti said the country's GDP is expected to grow between 5% to 6% in 2013.
Zeti said Malaysia's inflation, as measured by the consumer price index (CPI), is seen rising to between 2% to 3% in 2013 on
cost-push factors.
Zeti said costlier food and energy besides the potential adjustment to government subsidies may contribute to higher inflation
this year.
"We monitor inflation and growth prospects. The current monetary policy is supportive of growth," she said.
Domestic CPI had risen 1.6% in 2012.
On the ringgit, Zeti said the strengthening of the currency has been supported mainly by capital inflows as investors weigh the
economic and political sentiments here.
This comes amid weaker prospects abroad such as current developments in Europe.
"Investors which stayed on the sidelines in the past have been buying the ringgit recently," she said.
The ringgit had strengthened to 2.99 to the US dollar as of today.