Guan Eng: 'Incompetent' PN raiding trust fund when it's cheaper to borrow

 

DAP secretary-general Lim Guan Eng today accused the Perikatan Nasional-led government of incompetence and irresponsibility after the government used emergency powers to utilise the National Trust Fund (Kwan) for vaccine procurement.

In a statement today, Lim, a former finance minister, warned that Kwan was meant as a strategic cash reserve with RM17.4 billion in assets as of end-2018 based on the fund's latest publicly available financial accounts.

"Prime Minister Muhyiddin Yassin has admitted that the government has run out of money but dipping into over strategic cash reserves for our children and future investment has never been done by Pakatan Harapan even during the toughest of times," said Lim.

Lim also warned that withdrawing from Kwan now would set back progress in building the fund.

Instead of utilising Kwan, said Lim, the better way to fund vaccine procurement was to borrow since the rates are currently at record lows.

"On April 21, 2021, conventional 10-year Malaysian government bonds traded at a yield of 3.09 percent. As a comparison, 10-year yields averaged 4.08 percent in 2018, 3.31 percent in 2019 and 2.65 percent in 2020," he said.

Lim said that even if the government were to borrow another RM20 billion, the deficit-to-GDP ratio would only rise by 1.0 percent from the current level.

"The government can afford the minor budget deficit increase during a difficult economic recession and will not be punished by the markets.

"After all, even without any additional big borrowings by Malaysia, Fitch Ratings was not impressed and had downgraded Malaysia's sovereign credit ratings last year to the same level as Indonesia and Philippines.

"The international credits downgrade was not caused by any additional borrowings but due to chronic political instability and poor governance in relation to accountability and transparency of our public finances. That is why Malaysia was the only country in Asean to be downgraded even though other countries had increased their borrowings," he said.

Meanwhile, Lim said that it was ridiculous that Parliament was not allowed to resume despite all MPs having been vaccinated.

"What is the use of spending RM5 billion for vaccines and Covid-19 related measures then?" asked Lim.

In view of this, Lim urged the Yang di-Pertuan Agong to decree that the federal government must convene Parliament so that MPs can hold the government to account for the money spent and rectify mistakes made. - Mkini