Putrajaya has defended its use of money from the National Trust Fund (KWAN) to procure vaccines against the Covid-19 virus, saying it was left with no choice but to dip into the savings due to the burden of debts left by borrowings related to the 1MDB scandal.
Finance Minister Tengku Zafrul Aziz said the government had inherited more than RM1 trillion in borrowings and liabilities such as those related to 1MDB under the previous Barisan Nasional government.
“For example, the 1MDB obligation of RM40 billion is enough to pay the cost of the vaccines eight times over,” he said in response to critics who questioned the move to use money from KWAN to pay for the Covid-19 vaccination programme.
“So what is the best option for the government which inherits the burden of repaying the liabilities such as PFI on off-balance sheet, 1MDB, SRC, and so on, which is estimated to exceed RM20 billion a year for the next five years?” he asked, adding that the amount for the 1MDB debt repayment could finance the various economic stimulus packages to cushion the impact of Covid-19, such as Bantuan Prihatin Rakyat and the wage subsidy programme, as well as funding for vaccines.
PFI refers to Pembinaan PFI Sdn Bhd, a little-known company owned by the finance ministry, set up in 2006 as a special purpose vehicle to finance developmental projects. It was reported in 2018 that PFI, which had an initial seed fund of RM20 billion from the Employees Provident Fund, had accumulated debts of around RM50 billion.
Zafrul said using money from KWAN would prevent the country from slipping into debts that would be borne by future generations.
“The government is dutybound to take care of the current generation because if they are affected, there is no assurance that the future generation can reap prosperity.
“The government is also committed to replenishing KWAN once the crisis is over and the government’s finances are strong again,” he said.
Zafrul said the utilisation of KWAN to fund the purchase of vaccines would see the use of RM5 billion from some RM20 billion accumulated so far.
The government recently gazetted amendments allowing the use of funds from KWAN to procure vaccines and other expenses related to the battle against Covid-19.
KWAN is a savings fund from the country’s natural resources.
Zafrul said currently, KWAN is made up of RM10.4 billion from national oil firm Petronas, as well as another RM9.1 billion in cumulative returns on investments.
He said the use of the fund for Covid-19 vaccines was lawful and justified, adding that some RM42 million was once extracted to help finance the Paya Indah Wetlands project in Putrajaya.
“I don’t know if that was for an emergency or not,” he added.
He said KWAN was established with the goal of benefiting future generations.
“We are the future meant when the fund was established,” he said.