THE government will only use RM5 billion from the National Trust Fund (Kwan) for Covid-19 vaccination expenses, said Finance Minister Tengku Zafrul Tengku Abdul Aziz.

The RM5 billion covers the RM3 billion allocation he had announced for vaccine purchases when tabling Budget 2021 in November last year, but which was not part of the budget itself.

“Although I had announced that the government had allocated RM3 billion for Covid-19 vaccination last year, this sum was not budgeted in the RM322.5 billion Budget 2021,” he said in talking points for a press conference he gave to government-controlled media in Putrajaya today.

The slides and talking points were later distributed to other media organisations.

“As such, the RM3 billion allocation and the additional RM2 billion for the Pemerkasa programme (for Covid-19 vaccination) will be funded by Kwan,” Zafrul said.

The additional RM2 billion under Pemerkasa refers to the increased allocation in the RM5 billion for vaccination implementation announced by Prime Minister Muhyiddin Yassin in March.

Zafrul’s explanation today clarifies where the money for Covid-19 vaccine procurement and implementation is coming from, since it was not part of Budget 2021.

It also answers why Putrajaya is tapping into the Kwan fund despite having allocated RM3 billion for the vaccination programme last year.

Zafrul also said the fund, as of December 31, 2020, had RM19.5 billion.

The finance minister also said that the government’s budget deficit will rise to 6.2% of the GDP if it did not tap into Kwan funds.

He said that additional funding was needed as the government aims to complete the national vaccination programme by December 2021 instead of the first quarter of 2022.

“The allocation will include additional vaccine stock to mitigate delays in the vaccine delivery schedule and booster shots for those who need it.”

He said the additional cost for the vaccination programme was due to supplies to the private healthcare sector workers, rental for premises and allowances for volunteers. 

The finance ministry’s explanation on why Kwan is being used finally comes today after days of criticism following an amendment to the National Trust Fund Act 1988 last week, by way of an emergency ordinance without parliamentary oversight.

It is the second major financial amendment made using emergency ordinances, the first being to let the government spend taxpayers’ money without legislative approval.

The state of emergency only came into effect on January 11. Budget 2021 was tabled on November 6 and passed on December 15, 2020.

Tengku Zafrul in his press conference today also presented the economic situation in the country and government’s fiscal position, highlighting its RM1 trillion debt and obligations which made it necessary to tap into the Kwan fund for the Covid-19 vaccination programme.

The government since last year has also launched economic stimulus packages to mitigate the impact of the pandemic on the economy:

– RM250 billion under Prihatin;

– RM10 billion under Prihatin for small and medium enterprises;

– RM35 billion under Penjana;

– RM10 billion under KitaPrihatin;

– RM15 billion under Permai; and,

– RM20 billion under Pemerkasa.

“What is the best choice for the government to take in paying back liabilities such as off-balance sheet private finance initiatives (PFI), 1MDB, SRC and others, which are expected to cost more than RM20 billion a year, for the next five years? 

“The government not only faces limited fiscal room to fulfil these obligations, it is also facing financial restrictions in handling the Covid-19 crisis.

“Covid-19 is the biggest crisis we have faced in our history, therefore, the use of RM5 billion from Kwan to procure vaccines is appropriate,” he said. – April 26, 2021.