Dewan Rakyat unanimously allows govt to tap into KWAN

The use of this fund will help the govt in controlling the country’s fiscal position, says finance minister

pic by BERNAMA

THE Parliament unanimously passed the National Trust Fund (KWAN) (2021 Amendment) to allow the government to procure Covid-19 vaccine yesterday.

On the second tabling of the amendment to the National Trust Fund (KWAN) 2021, Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz (picture) said the use of this fund will help the government in controlling the country’s fiscal position, while giving a positive impact on the overall country’s financial position.

“Section 6 of the KWAN Act only allows KWAN funds to be used for development purposes. It needs to be amended to provide an alternative financing source to buy vaccines,” he told Dewan Rakyat.

Tengku Zafrul said Malaysia is not the only country to tap into its trust fund, as other countries such as Azerbaijan, Colombia, Chile, Kazakhstan, Mexico and Peru have done the same due to the declining commodity market price due to the pandemic.

“The government will work to increase the fund’s size again once the economy has returned to stability. This includes increasing the number of contributors by encouraging contributions from companies or other authorities, including companies that are involved in exploitation of petroleum or other shrinking resources as accorded in Section 5, Act 33,” he added.

Efforts to replenish KWAN funds need to be implemented with the cooperation of various relevant parties including from the federal and state government.

From the establishment of KWAN until the end of 2020, the national oil firm Petroliam Nasional Bhd has made a total contribution of RM10.4 billion.

Total accumulated assets of KWAN stood at RM20.9 billion including returns from investments in bonds, equities, deposits, gold and real estate investment trusts.

Earlier, the Parliament also passed the additional RM45 billion under the Covid-19 fund (KWC), as well as increasing the statutory debt limit to 65% from 60% of the GDP via a voice vote.

Tengku Zafrul said the statutory debt to GDP ratio will be more than 60% by the end of October due to additional funds under the Covid-19 bill and other plans.

The debt service coverage ratio for 2021 is expected to reach RM39 billion and it could increase to RM43.1 billion in 2022.

“The Ministry of Finance projects that this year’s allocation is insufficient to fund the stimulus packages,” he said out of the earlier RM60 billion allocation, only RM5 billion is left for the expenditures.

Taking additional requirements, as well as economic performance and statutory debt limits for this year and 2022 into consideration, Tengku Zafrul said it is justified for the KWC ceiling to be amended from RM65 billion to RM110 billion.

From the additional RM45 billion, he said RM12.7 billion will cover additional allocations of the Wage Subsidy Programme from RM18.3 billion to RM31 billion through the Strategic Programme to Empower the People and the Economy (Pemerkasa) stimulus package, Pemerkasa Plus, and People’s Protection and Economic Recovery Package (Pemulih).

Meanwhile, RM15.8 billion will be used to cover additional allocations of Bantuan Prihatin Nasional from RM25.2 billion to RM41 billion, taking into account the approval of the appeal as well as increased grants under Pemerkasa and Pemerkasa Plus.

He said the government also looked to increase the allocation for the Health Ministry for Covid-19 related expenditure to RM9 billion from RM5 billion.