KOTA KINABALU, Nov 28 — The special Sabah trust fund to channel unused federal allocations might not materialise in the manner envisioned by the state government, said Datuk Seri Masidi Manjun.

The Sabah finance minister said discussions with the federal government were ongoing, but these have brought to surface various issues that must be considered before the fund could be established.

"We have had engagement sessions a few days ago and their response is they are considering our proposal,” he told the state assembly today.

"But they have indicated that some allocations can’t be put in there because they are ‘loans,’ meaning the federal government borrowed funds from certain institutions and they have to give back at year end.

"It’s not a form of revenue that allows it to be used in this account,” he said.

The state had proposed the special trust fund in order to keep the development allocations that will end up going back to the federal government if the state is unable to utilise or commence the projects on time.

Sometimes, there are delays due to the late release of the funds from the federal to state.

Economy Minister Rafizi Ramli previously said that the proposal would require a thorough study by the Finance Ministry and revision of the existing laws.

Aside from unused allocations, the fund would also hold donations or contributions from the state government, government agencies, the corporate sector, non-governmental organisations and individuals.

According to Masidi, the special trust fund would assist the state government in carrying out various programmes or activities, particularly those involving contingencies such as disaster relief.

The fund is also for carrying out poverty eradication programmes, the provision of social facilities such as for education and health, the construction and maintenance of roads and slopes, water, and electricity as well as other development.