Diokno: PH Has Money For The Proposed Maharlika Sovereign Wealth Fund

Finance Secretary Benjamin Diokno said on Wednesday the Philippines has enough money for sovereign wealth funds despite its tight fiscal conditions, including a budget deficit and increased debt. The wealth fund could reach as much as ₱250 billion.

House Speaker Martin Romualdez led the filing of House Bill 6398, seeking to create a sovereign wealth fund to maximize the profitability of investible government assets, replicating the success of having one in other countries like Singapore.

“There is already a commitment from GSIS, SSS, DBP, Landbank, and National Government. We have the money for it,” Diokno said.

“The President will appoint people, there will be a governing body and it will be entirely separate from the government. There will be an advisory council where some cabinet members will be there but it will be independent,” Diokno added.

Lawmakers supporting the bill said the fund will be patterned after sovereign wealth funds of 49 other countries, including the GIC and Temasek of Singapore, and the same instrument used by Malaysia despite its controversial 1Malaysia Development Berhad state fund, which was plagued by corruption.

However, Diokno is confident that the proposed Maharlika Investment Fund will be managed well and independent of the government.

Political economists such as Calixto Chikiamco expressed concern that it may not be the right time to put up a sovereign wealth fund due to the country’s poor rule of law. He pointed out that “given the government’s tight fiscal position, it can’t afford to be seeding money for the sovereign wealth fund.”

“It will be funded from state pension funds and government funds. The risk is that investment decisions may be politicized as it was in Malaysia. We can’t rely on the country’s poor rule of law to expect accountability from management,” Chikiamco said.

Based on data from the Bureau of Treasury, the national government’s budget deficit reached ₱99.1 billion in October, up by 54.08%. However, data showed that the year-to-date total of ₱1.1 trillion is lower than ₱1.2 trillion deficit in 2021.

When asked for comments on the sovereign wealth fund, Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla said he has not reviewed the bill but is confident of growth and reducing the budget deficit.

“If deficits are falling, which will be the case if the economy is growing very fast. If the economy is growing very fast, revenue will grow faster than expenditures,” Medalla said.

Source: ABS-CBN, Inquirer.net