Maharlika Fund to free up fiscal space –DBM, Treasury

The proposed sovereign wealth fund, Maharlika Investment Fund (MIF), is seen to provide more breathing room for the government’s finances, the Department of Budget and Management (DBM) and the Bureau of the Treasury (BTr) said Saturday.

The proposed MIF is just a few steps closer to being established after the House of Representatives adopted the Senate version of the Maharlika Fund Bill during the bicameral conference committee meeting on Wednesday.

At the Saturday News Forum, Budget Undersecretary Joselito Basilito said the MIF could be tapped to invest in public-private partnership (PPP) projects and big-ticket infrastructure projects which are usually heavily funded through the national budget.

“That means less fiscal pressures, less need for the national government [to fund] these kind of infrastructures and that means mayroon tayong more fiscal space, meaning iyong natitirang pera o resources ng gobyerno mas maibibigay natin doon sa missionary areas, mas maibibigay natin doon sa intervention para sa social protection ng mga vulnerable sectors and at the same time iyong mga pangangailangan din sa buildings at iba pa,” Basilio said.

(That means less fiscal pressures, less need for the national government [to fund] these kinds of infrastructures and that means we have more fiscal space, meaning the remaining funds or government resources would more likely get sent to missionary areas, were more likely to go to interventions for the social protection of vulnerable sectors, and at the same time, infrastructure needs and other things.)

“Iyon po ang inaasahang direct and indirect effects ng pagkakaroon ng Maharlika Fund designed as this,” he said.

(Those are the direct and indirect effects of having a Maharlika Fund designed as this.)

The MIF bill states that the Maharlika fund would be created through the funds to be sourced from the following:

• 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 would come from the following sources:

• Bangko Sentral ng Pilipinas' total declared dividends
• National government's share of 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 from 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.

National Treasurer Rosalia de Leon echoed Basilio’s remarks.

She explained that the government operated on a fiscal deficit which compels it to borrow from both domestic and foreign sources.

“Dito po mababawasan pa iyong pressure na pangungutang dahil nga po the Maharlika is equity investments ‘no. So, para pa rin po na they will be the one to be able to take on the funding requirements of these priority projects together with the investments coming from the private capital,” de Leon said.

“So, hindi ba po, ang sabi nga po ni Usec. Basilio, mapi-free-up po iyong tinatawag na fiscal space. Fiscal space na puwede nga pong mapunta sa mga social projects na dapat ginagawa po ng gobyerno,” she said.

As of end-April 2023, the national government’s outstanding debt stood at P13.911 trillion, up 0.4% or P52.24 billion, from P13.856 trillion as of end-March 2023.

The Treasury attributed the increase to “the net issuance of external debt and local currency depreciation against the US dollar.”

Meanwhile, as of January to March, the Philippine government’s fiscal balance stood at a deficit of P270.9 billion, down from P316.8 billion year-on-year. — DVM, GMA Integrated News