MANILA – The country’s economic managers on Friday expressed their full support behind the creation of the Maharlika Wealth Fund (MWF), saying it would serve “as a vehicle to move forward the agency for prosperity and achieve the economic goals of the administration.”
“Without a doubt, the creation of the MWF will help us achieve our agenda for prosperity and the objectives for inclusive and sustainable economic growth we have outlooked in our medium-term fiscal framework, eight-point socioeconomic agenda and in the Philippine Development Plan 2023-2028,” Finance Secretary Benjamin Diokno said in a briefing.
Diokno made the statements amid concerns from several sectors over issues of viability and transparency in the creation of the Maharlika Fund.
Previously, the Government Service Insurance System (GSIS), Land Bank of the Philippines (Landbank), Social Security System (SSS), Development Bank of the Philippines (DBP), and the Bureau of the Treasury (BTr) were proposed to contribute the seed money for the proposed fund.
However, a change was announced by proponents of the House measure, excluding now the SSS and the GSIS from contributing the seed capital.
Instead, Bangko Sentral ng Pilipinas (BSP) was tasked to contribute 100 percent of the dividends it has to remit to the national government for the welfare funds’ first two years of operations.
Diokno noted that to date, the BSP invests its funds in foreign government funds and some other investment vehicles managed by professional fund managers, among others, and noted that “as far as I’m concerned, I’m not satisfied with the returns.”
With the MWF, he said the investments would be placed in diversified financial assets and development projects, such as toll roads and other infrastructure projects.
“This will ultimately complement the national government’s budget and infrastructure program. So instead of actually reducing the expected revenues, the BSP investing a portion of its profits to the fund will have an effect of magnifying the returns on the investments,” he said.
Aside from BSP dividends, Diokno said other sources of funds for the MWF include royalties from national resources based on the fiscal regime to be implemented by the national government, proceeds of the privatization of state assets, and public borrowings
He said GSIS and SSS “may still contribute to the MWF”, provided that their respective boards approve it.
Diokno was joined by Budget Secretary Amenah Pangandaman, Socioeconomic Secretary Arsenio Balisacan, and BSP Governor Felipe Medalla in supporting the creation of the MWF, as they cited the success of the social welfare fund of the Indonesia Investment Authority, which used the investments to finance major infrastructure projects amid the pandemic.
In a joint statement, they pointed out that in Singapore, gains from investments of GIC Private, Ltd. (GIC), which pools funds from the central bank and state investor Temasek Holdings Pte., are the biggest contributors to the national budget since 2018.
They also cited the direct and indirect benefits of the MWF that include increased investments in infrastructure projects, countryside development, and increased access of future generations to income from investments in potential earnings from extracted natural resources, such as mining.
“In the near and medium term, a sovereign wealth fund will enhance our fiscal space and reduce fiscal pressures as the fund pursue public infrastructure projects, as well as reduce uncertainties in cases when fund resources are channeled to high-yielding financial undertakings and assets that are underinvested in today’s environment of high global inflation and the lingering effects of the Covid-19 pandemic,” the economic managers said.
They thus called for the immediate passage of the proposed measure, noting that “this will redound to growth and help us achieve our economic transformation towards inclusivity and sustainability.”
“Let us not delay economic progress. Let us not deprive our people of this opportunity for prosperity,” they said. (PNA)