Diokno: BSP contributing to Maharlika fund will not weaken its mandate

Finance Secretary Benjamin Diokno on Friday allayed fears that the Bangko Sentral ng Pilipinas (BSP) may find it difficult to perform its price and financial stability mandate once its dividends are allocated to the proposed Maharlika Investment Fund (MIF).

“BSP contribution to MIF is not a threat to financial stability,” Diokno, who is also a former BSP governor, said in a statement.

In a television interview, former BSP senior deputy governor Diwa Guinigundo sounded the alarm that if the central bank is weak in terms of finances, it might be difficult for it to bail out distressed banks, which would then affect its mandate of safeguarding prices and keeping the financial system healthy.

Diokno, however, said that the BSP’s financial condition “now is much better than when its revised charter was being deliberated upon.”

"In addition, the BSP was granted additional tools to conduct its primary mandates," he said.

The Finance chief cited the time when the BSP helped boost the government’s war chest to respond to the COVID-19 pandemic.

"At the height of the pandemic, when I was BSP Governor, BSP extended a loan of P540 billion — repeat, P540 billion— interest-free to the national government," Diokno said.

"To help the country during its economic distress. That’s how good BSP’s finances are," he added.

The House of Representatives adopted the Senate version of the proposed MIF bill during the bicameral conference committee meeting Wednesday. 

Following marathon deliberations, the Senate approved early Wednesday the proposed measure seeking to establish the sovereign wealth fund.

The bill states that the MIF would be created through the funds THAT will be sourced from:

• Land Bank of the Philippines (LBP): P50 billion
• Development Bank of the Philippines (DBP): P25 billion
• National Government: P50 billion

Meanwhile, the contribution from the national government will come from the following sources:

• Bangko Sentral ng Pilipinas' total declared dividends
• National government's share from the income of PAGCOR
• Properties, real and personal identified by the DOF-Privatization and Management Office
• Other sources such as royalties and/or special assessments

Among the major amendments introduced to the bill was the absolute prohibition of the use of funds of the Government Service Insurance System (GSIS), Social Security System (SSS), Philippine Health Insurance (PhilHealth) corporation, Pag-IBIG, Overseas Workers Welfare Administration (OWWA), Philippines Veterans Affairs Office (PVAO) in the capitalization and investments in the Maharlika fund.

“The contributions being asked from BSP for the first two years of the MIF, for a maximum of P50 billion pesos, are dividends declared in favor of the national government,” Diokno said.

“That’s the net profit of BSP and the national government decides how to use it.

I estimate that BSP’s dividend for the national government in 2022 would be in the neighborhood of P30 billion,” the Finance chief said.

Senator Mark Villar sees the full implementation of the proposed MIF within two years from its passage into law. 

Senate Minority Leader Aquilino "Koko" Pimentel III on Friday, however, urged President Ferdinand "Bongbong" Marcos Jr. to veto the MIF saying it "is not acceptable" in its current form. —VAL, GMA Integrated News