The Fiscal Policy Committee (FPC) has agreed to set up a Fiscal Risk and Unexpected Liability Technical Committee comprising the Finance Ministry, Bank Negara Malaysia, Economic Planning Unit and Public Private Partnership Unit.

Prime Minister Datuk Seri Najib Tun Razak said the committee will be responsible for evaluating and proposing measures to rein in the Federal Government's fiscal risks and unexpected liabilities.

The decision on forming the committee was taken at the second PFC meeting held today to look into the country's current fiscal position.

In a statement, Najib, who is also Finance Minister, said the meeting also discussed a Medium Term Fiscal Framework to ensure the continued strength of the country's financial position and fiscal capacity.

Malaysia's economy, which grew 4.2 per cent in the first quarter, could achieve the 4.0-4.5 per cent overall growth target for this year as well as the 2016 fiscal deficit target of 3.1 per cent of Gross Domestic Product, he noted.

"The meeting also looked at the implementation status of the recalibrated Budget 2016, and so far the implementation has been on schedule and the performance has been praiseworthy," he said.

The government is committed to fiscal consolidation and implementing optimal expenditure policies as well as improving tax compliance and diversifying the nation's revenue sources, he added.