PUTRAJAYA must have diverted the original RM3 billion allocation for Covid-19 vaccines, forcing it to tap into the National Trust Fund (KWAN), said Najib Razak.

“It is certainly unbelievable that such an important spending as vaccines was never allocated in the government’s RM310 billion budget last year,” Najib was quoted in a Free Malaysia Today report today.

“The original RM3 billion allocation must have been diverted elsewhere.” 

Yesterday, Finance Minister Senator Tengku Zafrul Tengku Aziz admitted that the original RM3 billion allocated for the Covid-19 vaccination programme had never been accounted for in Budget 2021.

But Najib, who had debated the budget bill last year, said Science and Technology Minister Khairy Jamaluddin had told parliament that RM3 billion was enough to vaccinate 83% of the population.

According to Najib, Khairy said RM2 billion would be used to procure the vaccines while RM1 billion would be for other costs.

“Now, it has increased to RM5 billion – RM3 billion to buy vaccines and RM2 billion is for the logistics of carrying out the vaccinations,” said Najib.

“Are we to believe that vaccines suddenly cost 50% more while logistics cost has increased 100% within five months between last December and April?”

He said KWAN funds gave an average 6.3% returns annually and was higher that the borrowing cost of long-term government bonds.

According to Najib, the government’s recent domestic borrowing of RM4.5 billion was at an interest rate of 3.48% while the RM5.4 billion 10-year sukuk raised from foreign markets was for an interest rate of 2.07%.

“So, any reasonable person will ask, why are you dipping into a trust fund that pays you 6.3% returns instead of borrowing internationally at 2.07% or domestically at 3.48%?

“The much-feared RM1 trillion national debt figure and the government limits on debt-to-GDP ratio is most probably the reason why the government decided to dip into KWAN to fund the entire RM5 billion for vaccines.

“It would be politically damaging for the Perikatan Nasional government to be the first government in the country to breach that limit,” Najib told FMT.

He said the RM1 trillion mark would refer to direct government debt and does not include the contingent liabilities and government guarantees the former Pakatan Harapan administration included in its debt calculations.

Najib said when his administration lost power, government debt stood at RM686.8 billion with a debt-to-GDP ratio of 48.7%.

This, he said, went up to RM793 billion as of end-2019. By the end of last year, the debt had ballooned to RM879.6 billion, which is 62.2% of the GDP. This is higher than the 60% limit.

Najib said this was how Perikatan Nasional got Petronas to sell its assets such as KLCC and MISC shares worth RM3 billion and how it got the company to take on an additional US$6 billion (RM24.7 billion) new loans last April so the dividend from Petronas increased to RM34 billion, although the company lost RM21 billion last year.

“Last week, too, Petronas borrowed another US$3 billion (RM12.4 billion) from international markets,” he said, adding that he believes Petronas will be asked to sell more shares this year.

“Dividends from Petronas are considered income to the government and not debt. The debt is now carried by Petronas.”

He said he suspects the government will seek higher dividends from Petronas this year, more than the RM18 billion it intended to give this year, to avoid adding to government debt. – April 27, 2021.