Analysts Say That Requirement to Contribute to Wealth Fund Can Undermine BSP’s Integrity

Analysts have mentioned that requiring the Bangko Sentral ng Pilipinas (BSP) to contribute to the Maharlika Wealth Fund (MWF) by giving its annual dividends could compromise its integrity.

President of the Foundation for Economic Freedom (FEF), Calixto V. Chikiamco, has stated that ordering the BSP to contribute via turning over dividends is “a bad idea.”

“Firstly, it amends the Charter of the Bangko Sentral, which mandates that the dividends of the BSP will go to its recapitalization. Such an amendment in the MWF is legally doubtful without an express amendment of the BSP Charter,”  mentioned Chikiamco.

“More importantly, by mandating that the profits of the BSP go to the MWF, it will undermine the mission and integrity of the Bangko Sentral because the BSP will be perceived as a profit-making institution and its income objectives will be perceived as driving monetary and exchange rate policy,”

He adds that “It will destroy BSP as a credible institution focused on fostering price and financial stability.”

Recently, Department of Finance Secretary Benjamin E. Diokno mentioned that the proposed Maharlika Wealth Fund is currently being amended to include BSP’s contribution of 100% of its annual dividends to the sovereign wealth fund for the first two years.

After the first two years of the proposed fund, the BSP would need to only contribute 50% of the declared dividends, and the remaining 50% will be allocated to a special account which would boost the ₱200 billion BSP capitalization.

Source: Business World