by RAHIMI YUNUS / pic by BLOOMBERG
FINANCE Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz (picture) has admitted that the government is burdened by a legacy debt of over RM1 trillion and thus, they will be tapping RM5 billion from the National Trust Fund (KWAN) for vaccine procurement.
He said the government will not touch on the principal, which amounts to RM10.4 billion, and instead will draw the RM5 billion from the fund’s return on investments (ROIs) of RM9.1 billion in total.
He further said the use of the funds is limited to vaccine procurement and not for other purposes that are not stated in the law.
KWAN was established in 1988 under the National Trust Fund Act 1988.
KWAN net assets stand at RM19.5 billion as of Dec 31, 2020, comprising RM10.4 billion of contributions from Petroliam Nasional Bhd and RM9.1 billion in ROIs.
The minister said KWAN was set up to ensure optimal use of the country’s natural resources wealth for the benefit of the country and future generations.
“We are the future that is being referred to in the establishment of the fund,” Tengku Zafrul said in a press conference in Putrajaya yesterday.
He said the RM3 billion allocated for vaccine procurement previously was an estimation and it was not included in Budget 2021.
Now, he said the government has confirmed the RM5 billion budget and is planning to expedite the National Covid-19 Immunisation Programme to reach 80% of the population by December 2021 instead of February 2022.
He said the government has limited fiscal space and has to dip into KWAN instead of borrowing more.
For instance, he said the government’s obligations to 1Malaysia Development Bhd (1MDB) are amounted to RM40 billion and this is enough to cover the cost of vaccines over eight times.
He also said the government is obligated to inherit liabilities related to private finance initiative through an off-balance sheet, 1MDB, SRC International Sdn Bhd and others that are estimated at over RM20 billion a year for the next five years.
“The government is committed to replenishing KWAN after the crisis is over and the government’s finances come back stronger,” he said.
Politicians and experts have criticised the government’s move to use funds from the KWAN to procure Covid-19 vaccines and any related expenses.
Economist Dr Nungsari Ahmad Radhi said KWAN is supposed to be for the future generations and any withdrawal has to obtain Parliament’s approval.
“That’s why it has never been used,” he said, save for one project — Malaysia Wetlands Sanctuary.