DIPPING into the National Trust Fund (KWAN) for funds to procure Covid-19 vaccines and raising the statutory debt limit goes to show that Putrajaya is grappling with a tight fiscal position, said economist Lee Heng Guie.

“Rightfully, we have limited fiscal space. The government has used the Covid-19 bill (Temporary Measures for Reducing the Impact of the Coronavirus Disease 2019) to allow them to raise the debt-to-GDP ratio to 60% to provide them the extra space in case they need more fiscal stimulus,” the Executive director of the Socio-Economic Research Centre told reporters at a media briefing today.

He added that apart from raising the debt ceiling, Putrajaya may also need to tap into other resources for funds, which has been done with the draw down from KWAN, to foot the bill of vaccine procurement.

Finance Minister Tengku Zafrul Tengku Abdul Aziz recently said that Putrajaya would take RM5 billion from KWAN for vaccination expenses.

The Covid-19 bill was tabled in Parliament last year to raise the self-imposed debt ceiling from 55% to 60% of the GDP.

“All these reflect (that) the fiscal position is tight and the government will have to spend with whatever resources they have and make sure that the stimulus package will have the desired outcome,” he said.

He said the measures rolled out under the several economic aid packages, such as the Wage Subsidy Program, grants and the loan moratorium has helped to ease the financial burden of individuals, and small- and medium-sized enterprises.

However, he is particularly concerned over the withdrawals from the Employees Provident Fund (EPF) via the i-lestari and i-sinar schemes – although it may have helped vulnerable groups.

“At the current situation, when we look at the amount of money that has been withdrawn from EPF, I am worried if there is another cycle of crisis, we may not be able to tap into the employees’ savings to ease their cash flow (burden),” he said.

Therefore, he hoped for a more stable economic recovery, which will allow contributors who withdrew their savings to replenish their retirement funds.

As at March 12, a total of RM19.45 billion was approved for i-Lestari withdrawals for 5.23 million contributors.

Meanwhile, RM52.48 billion had been approved for 5.94 million applicants for i-Sinar withdrawals up to March 14. – May 6, 2021.