(Bidor, Thursday): The International Monetary Fund managing director, Michel Camdessus said yesterday that Malaysia needs a "better policy mix" to deal with the national economic crisis.
I agree with Michel Camdessus and this is why the DAP has been calling for a third 1998 Budget to grapple with the national economic crisis, just as the DAP had at the end of October called for a second 1998 Budget as the first budget of Oct. 17 had failed to restore confidence, whether in the stockmarket, the Malaysian ringgit or the overall economic situation.
The Cabinet at its weekly meeting next Wednesday should seriously consider the proposal for an emergency Parliamentary meeting within the next three weeks to underline both the urgency and gravity of the economic crisis.
The third 1998 Budget should address the need for a "better policy mix" which Michel Camdessus had referred to as well as the 15-Point Open Letter which I had sent to all Cabinet Ministers before their first 1998 Cabinet meeting last week.
Clearly, there is an urgent need for a new policy of greater transparency in all aspects o the national economy, including the banking and financial sector, to restore public confidence and prepare the basis whereby the government, society and people can respond as one unit to ensure that Malaysia can tide through the crisis in as short a time as possible with the minimum of avoidable pain, hardships and sufferings to the people.
In the longer run, greater transparency will help to build a strong and healthy banking system to complement the real sector or business sector of the economy for continued growth.
Another area which should be addressed is the nationís international reserves, which had fallen by RM11.5 billion from RM70.6 billion on 30th January 1997 to RM59.1 billion as on 31st December 1997.
The present international reserves of the country would now be much lower by a few billions of ringgit as Bank Negara had intervened at least three times in the currency market last week to prop up the ringgit, which broke the psychological barrier of RM4 ringgit against the US dollar on 5th January and threatened to break another psychological barrier of RM5 ringgit against the US dollar within the next 24 hours when it fell to RM4.822 the next day.
The government should seriously consider a new policy of increasing its external reserves to at least over US$50 billion, which would be a prudent financial policy and a good defence against currency speculators.
It is here worth noting the external reserves of other countries: