KUALA LUMPUR, July 28 — Fearing possible public backlash, the Employees Provident Fund (EPF) today poured cold water on rumours it was in talks with government agency Prokhas for a RM5 billion loan to help it carry out two projects under the second economic stimulus announced in March.

“The Employees Provident Fund denies that it is currently in talks with Prokhas for a RM5 billion loan,” its public relations general manager Nik Affendi Jaafar wrote in an email to The Malaysian Insider today.

A local business newspaper The Malaysian Reserve, which carried the news yesterday, said the national workers pension fund was ready to loan the money to the “special projects” company wholly-owned by the Finance Ministry, but did not mention the interest rate it would charge.

Reuters reported the daily had quoted an unnamed source saying that Prokhas was also looking at other options, including government bonds and private debt securities to finance its two projects: the Working Capital Guarantee Scheme and the Industry Restructuring Loan Scheme.

Reuters also noted that EPF may draw severe criticism if it gave Prokhas the loan, especially as the government had already set aside RM5 billion for each of the two schemes.

The government had been blasted last year for pumping RM5 billion into another state-owned investment company, ValueCap, in a move wide-seen as bailing out local companies that were sinking on the stock exchange.