The Malaysian government will not stray from its policy of telling the truth about its spending and its current fiscal state, despite fears that this approach has led to loss of investor confidence of late.

Affirming this, Finance Minister Lim Guan Eng said it was more important for the new government to show that it was committed to transparency and that it had shed the old administration's practice of "hiding spending".

He said the government was simultaneously taking steps to improve the country's fiscal state and is confident Malaysia will eventually emerge stronger than ever, once it has done so.

"(We) must remember that Malaysia's economic fundamentals are still strong and solid, if we see the financial sectors, the banks, its still strong as capitalisation is high... and liquidity in the funds market (pasaran danah) is high. But we must ensure the fiscal situation is improved," he said to reporters following a closed-door gathering at the ministry in Putrajaya today.

He had been asked how the government was planning to reassure investors about Malaysia's economic stability following Prime Minister Dr Mahathir Mohamad's revelation that the national debt had exceeded RM1 trillion.

Analysts have said that this statement and other revelations made by Lim as his ministry undertook a discovery exercise on the scandal-ridden 1MDB investment fund have led to a poor showing at Bursa.

It was reported yesterday that Malaysian stocks took a tumble, with the stock exchange hitting its lowest point in five months after falling for a fourth straight session.

Even so, Lim said the country could not afford to be anything but truthful to the rakyat and investors on the matter of spending.

He said: "I do not understand why you say transparency by the prime minister and also by the finance minister...can be considered the cause of the (Bursa) fall. As I am not a stock broker I wouldn't know whether this is the cause but I think that is up to the stock market to determine.

"But of course, we will keep an open mind, we will take all views and we will accept all these criticism, but we feel that honesty is the best policy. I think we have to be truthful and we have to be transparent. If we are transparent and we will be punished (for it) then I think there is nothing we can do, but we will still continue to be transparent.

"We will monitor (the stocks and foreign capital outflow), we are always monitoring... but it is important we show that we will not adhere to the old practices where spending is hidden. That will no longer happen."