KUALA LUMPUR: The economic stimulus package to be unveiled by Malaysia has received the backing of International Monetary Fund (IMF) managing director Dominique Strauss-Kahn, who termed the efforts by Malaysia to tackle the global economic crisis as significant,
He said the new stimulus package, which comes on the heels of a RM7bil plan announced late last year, would be appropriate as raising domestic demand was important in dealing with the global crisis.
Deputy Prime Minister Datuk Seri Najib Tun Razak said on Friday that the mini-budget to boost the national economy would be tabled at the next Parliament sitting.
“Global trade is decreasing as a consequence of declining global demand and the shortage of trade finance,” Strauss-Kahn told a press conference at Bank Negara.
He said China’s massive stimulus package would help shift the driver of growth from exports to domestic demand and this would indirectly lead to more intra-regional trade.
The IMF chief, who is here for the South-East Asia Central Banks Group governors’ conference, cautioned that although large fiscal stimulus packages around the world could lead to another crisis, “the risk of not containing the present crisis is too great.”
He explained that money being spent by governments to boost growth was good but reminded that this had to be accompanied by restructuring of banking sectors that had gone bad.
Strauss-Kahn stressed that countries must avoid trade and financial protectionism as insular trade restrictive policies did not work.
Source : The Star