Economic managers vouch for Maharlika Fund’s ‘direct, intergenerational’ benefits

The economic managers of President Ferdinand "Bongbong" Marcos Jr.'s administration are backing the creation of the Maharlika Wealth Fund as they vouch for the sovereign fund’s benefits for the near and medium term.

At a press briefing in Manila on Friday, Finance Secretary Benjamin Diokno read the economic managers’ statement of support for the Maharlika Wealth Fund.

Signatories in the joint statement include Diokno, Budget Secretary Amenah Pangandaman, Socioeconomic Planning Secretary Arsenio Balisacan, and Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla.

“We, the economic managers of Marcos Jr. administration, strongly support the creation of the Maharlika Wealth Fund as a vehicle to move forward the Agenda for Prosperity and achieve the economic goals of the administration for the nation,” the economic managers said as read by the Finance chief.

“The establishment of a sovereign wealth fund (SWF) is a tried and tested investment vehicle that has been used by governments in both first world and developing countries to achieve their economic objectives,” they said.

The proposed Maharlika Wealth Fund seeks to maximize the profitability of government assets by investing the revenue surplus of state-run financial institutions.

The creation of the Maharlika Wealth Fund is contained in House Bill No. 6398, filed by House Speaker Ferdinand Martin Romualdez, and Ilocos Norte 1st District Representative Ferdinand Alexander “Sandro” Marcos III, both relatives of President Marcos.

Other authors of the measure were House Majority Leader Manuel Jose Dalipe, Senior Deputy Majority Leader Ferdinand Alexander Marcos, Tingog party-list Representatives Yedda Marie Romualdez and Jude Acidre, and Marikina City Representative Stella Luz Quimbo.

Diokno earlier said the establishment of a Philippine sovereign wealth fund “has been the imprimatur of the President” and that an inter-agency committee composed of the Department of Finance (DOF), Department of Budget and Management (DBM), National Economic and Development Authority (NEDA), and government financial institutions (GFIs) prepared the bill, which was then filed in the House of Representatives.

“We are likewise grateful to have a President who also recognizes the benefits of a Sovereign Wealth Fund,” the economic managers said.

“These benefits include both direct and intergenerational benefits,” they said.

Direct benefits of the proposed wealth fund include “increased investments in and funding of big-ticket infrastructure projects, high-return green and blue projects, and countryside development, including agriculture.”

Meanwhile, intergenerational benefits include increased access of future generations to income from investments, such as potential earnings from extracted natural resources such as in mining, according to the economic managers.

“In the near and medium term, a sovereign wealth fund will enhance our fiscal space and reduce fiscal pressures, as the fund pursues 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.

"We thank our legislators for their hard work and openness in continuously improving the bill, and for their continued support in the passage of our economic and fiscal reforms, including the amendments to several economic liberalization measures and our tax reform programs," they added.

The seed funding for the proposed Maharlika Wealth Fund could reach around P150 billion, Quimbo said Thursday.

Quimbo earlier announced that with Government Service Insurance System (GSIS) and Social Security System (SSS) are out of the picture and that the Maharlika Wealth Fund would be funded by state-run banks LandBank of the Philippines (P50 billion), the Development Bank of the Philippines (P25 billion), and the dividends/profits of the Bangko Sentral ng Pilipinas.

The MWF initially eyed P250 billion in seed funding from state-run financial institutions and P25 billion from the National Treasury.

Of the P275 billion, P175 billion would have been sourced from the GSIS and SSS. This amount earned flak from the GSIS and SSS members, economists, and even business groups.

But the change of heart, Quimbo said, showed that Congress was committed to addressing the public's concerns. — DVM, GMA Integrated News