PUTRAJAYA: The country’s deficit and borrowings will increase if the National Trust Fund (KWAN) is not used to finance the government’s vaccination programme, says Tengku Datuk Seri Zafrul Tengku Abdul Aziz.
The Finance Minister said the deficit target may increase to 6.2% of the gross domestic product (GDP) if the government does not utilise the RM5bil from KWAN.
He also explained the amount will not be taken from KWAN’s RM10.4bil capital but from the RM9.1bil generated in returns.
“The use will only be for vaccination and not for other purposes. We are committed to replenishing the fund when this crisis is over and the government’s finances are strong again, ” he told a media conference yesterday.
The newly gazetted Emergency (National Trust Fund) Ordinance 2021, which came into force on April 21, enables the government to utilise money from KWAN which is derived mainly from petroleum revenue.
As at Dec 31,2020, the fund’s nett asset stood at RM19.5bil, of which RM10.4bil is contribution from Petronas and RM9.1bil is in the form of accumulated investment returns.
Tengku Zafrul said the government is aware of questions raised by many parties over the decision to use funding from KWAN.
“Many politicians, including those from the previous administration, are now asking why the Perikatan Nasional government needs to use the fund instead of more borrowings, ” he said.
Tengku Zafrul noted the government had inherited RM1tril in debts and liabilities, including loans which are zero Gross Domestic Product multiplier and bring zero revenue to the government.
This includes 1Malaysia Development Berhad (IMDB) and Private Finance Initiatives for off-balance sheet expenditure, he said.
Tengku Zafrul pointed out the 1MDB obligation of RM40bil is sufficient to pay the cost of vaccines eight times over.
He also noted that the objective behind the setting up of KWAN was to ensure optimum use of the country’s natural resources for the benefit of the country and future generations.
Section 6 of the National Trust Fund Act allows for the fund to be used, 10 years after the Act was enforced in 1988, for development projects and as soft loans to federal and state governments.
He said in 1998, in accordance with paragraph (a) of Section 6 of the Act, an amount of RM42mil had been used for the Paya Indah Wetland project.
Tengku Zafrul said during Budget 2021, the government announced it would set aside an allocation of RM3bil for vaccination purposes, but pointed out that the cost was not included in the RM322.5bil budget allocation.
“The RM3bil and the additional RM2bil announced under the Pemerkasa programme will be from KWAN, ” he said.
The additional cost for the vaccination programme, among others, was due to the early target set for its completion which is by December this year instead of the first quarter of 2022, he said.
He added that the government will also procure buffer stock, additional vaccination for those requiring additional dose and other costs.
In Alor Setar, National Covid-19 Immunisation Programme coordinating minister Khairy Jamaluddin noted the amount included vaccine procurement, involving an allocation of RM3bil, and RM2bil for the implementation of the immunisation programme.
Elaborating further, Khairy said the expenditure includes the provision of facilities such as renting halls, utility payments and food preparation, as well as the payment of allowances to staff involved.
Khairy was speaking at a press conference yesterday after the Kedah-level National Covid-19 Immunisation Programme Task Force meeting which was also attended by Kedah Mentri Besar Muhammad Sanusi Md Nor.