KUALA LUMPUR: The Finance Ministry has stressed that Malaysia is neither facing nor heading towards any economic or financial crisis despite being affected by challenges due to external factors beyond the government’s control.

Its minister, Tengku Datuk Seri Zafrul Abdul Aziz, said the country’s economic situation today is far different from that during the Asian Financial Crisis (AFC) of 1997 and 1998.

“The fundamentals of the economy and financial system are much different now,” he said during the Minister’s Question Time session in the Dewan Rakyat today.

This is due to the various economic and financial reforms implemented following the AFC such as the diversifying the structure of the domestic economy, supported by a well-capitalised financial system and strong external position, he said.

He was replying to Wong Hon Wai (DAP-Bukit Bendera) who wanted to know whether a financial crisis is forming following the ringgit’s depreciation against the US dollar, rising inflation and growing federal government debt.

“As an example, the country’s current financial market is very open with high participation of foreign investors, and we have a current account surplus driven by diverse exports,” Tengku Zafrul said.

This year’s current account balance has remained positive with a RM3.0 billion surplus in the first quarter and RM4.4 billion in the second quarter, he noted.

He also said the economy contracted by 7.4 per cent during the AFC, 1.5 per cent during the global financial crisis and 5.5 per cent at the peak of the Covid-19 crisis.

“To recap, our currency depreciated nearly 54 per cent in 1997, with the lowest rate of RM4.88 to the US dollar,” he said.

He added that the country had a current account deficit of over RM16.7 billion in 1997 and more than 102,000 people lost their jobs, while inflation surged to a high of 6.2 per cent in June 1998. - Bernama