Zeti: We know how to deal with 1MDB

She says Bank Negara won't allow any company to have a negative impact on the national economy.

PUTRAJAYA: Bank Negara Malaysia declared today that it would not allow any company to have a negative systemic effect on the national economy.

“That is the basic principle,” said the central bank’s governor, Zeti Akhtar Abdul Aziz, when asked to comment on 1Malaysia Development Bhd (1MDB)’s huge outstanding debts.

“We will never comment on an individual entity, but we have arrangements to deal with it so that no individual entity will have a systemic implication on the overall financial system of our economy.”

Zeti was speaking to reporters after a ceremony where the Malaysian Government and the World Bank Group signed an agreement to open a World Bank Group Office in Kuala Lumpur.

Asked on the investments brought back from the segregated portfolio company registered in the Cayman Islands, she reiterated: “We do not comment on individuals.”

“In the case of any extension being provided, that is not by Bank Negara; it is from the lenders, who are the commercial banks. They made those decisions,” she added.

Commenting on the European Central Bank quantitative easing (QE) programme, she said if the measures provided financial stability to global financial markets including Europe itself, it would be positive for Malaysia.

“If it supports the recovery in growth and development in Europe, that is also positive,” she added.

On the ringgit’s current movement, Zeti said the central bank had seen this level before and it reflected events that unfolded in the global environment.

“BNM believes it would not reflect the country’s strong underlying fundamentals, but once the event settles down and stabilises, the ringgit will trend toward our underlying fundamentals.”

Zeti said the country’s projected inflation rate of between 2.5% and 3.5%, highly capitalised banking system and credit growth of 10% supported sustainable growth.

She added that the country’s Gross Domestic Product growth for 2014 was expected to come in within the projected forecast.

– BERNAMA