Balisacan: Maharlika Investment Fund ‘appropriate at this time’

Socioeconomic Planning Secretary Arsenio Balisacan believes that the establishment of a sovereign wealth fund is appropriate despite the risks of a global recession and high interest rates.

"It’s always the right time," Balisacan, the Marcos administration’s chief economist, told reporters on Saturday.

"The participation of funds like this as a vehicle for attracting resources is, I think, appropriate at this time," he said.

The National Economic and Development Authority (NEDA) was asked if the economic conditions, given the looming global recession and high interest rates, were appropriate to establish the Maharlika Investment Fund (MIF), which could be tapped to finance the country’s economic development in the future.

The World Bank has earlier said that the successive interest rate hikes by central banks across the world — to tame inflation amid supply constraints amid the Russia-Ukraine war — could trigger a global recession in 2023. 

On Thursday, the House of Representatives approved on third and final reading House Bill 6608, which was certified as urgent by President Ferdinand Marcos Jr.

The proposed measure seeks to maximize the investible funds of state-run financial institutions and ultimately increase public funds for nation-building.

Under the bill, the MIF would be funded by the investible resources of the Land Bank of the Philippines (P50 billion), the Development Bank of the Philippines (P25 billion), and the dividends or profits of the Bangko Sentral ng Pilipinas.

"I think the primary consideration here now is our need for vehicles that will attract investment funds, which we can use for our development needs," Balisacan said.

"We are aiming for a rapid transformation of our social and economic sectors and that will require a lot of resources," he added.

Amid criticisms that the government must focus on reducing poverty incidence instead of creating a sovereign wealth fund, the NEDA chief said that "solving poverty requires a lot of investments."

"That’s what we’re trying to do," he said.

"We’re trying to attract all forms of vehicles that we can tap, including funds like this," Balisacan said, noting that public-private partnerships, official development assistance, and the national budget, along with the MIF, are all needed "to enhance our ability to accelerate and ramp up the investment requirements enshrined in our Philippine Development Plan and Ambisyon Natin 2040."

"We need to move beyond business as usual. We need to be more ambitious compared to what we have been doing in the last four decades," he added. 

The Philippine Development Plan 2023–2028, the country’s blueprint for socioeconomic development over the medium term, contains the socioeconomic targets of the administration in the next six years. 

Some of the goals under the plan are the following:

• Annual real gross domestic product growth of 6.0%-7.0% in 2023 and 6.5%-8.0% from 2024 to 2028
• Headline inflation and food inflation of 2.5%-4.5% in 2023 and 2.0%- 4.0% from 2024 to 2028
• Reduction of unemployment to 4.0%-5.0% in 2028 from an average of 5.4% in 2022 while increasing the share of wage and salaried workers in private establishments from 49.6% on average in 2022 to 53.0%-55.0% in 2028
• National government debt stock to GDP ratio reduced to 48.0%- 53.0% in 2028 from 63.7% in 2022
• Poverty incidence reduced from 18.1% in 2021 to a single-digit level of 8.8%-9.0% in 2028

—VBL, GMA Integrated News