Maharlika Fund eyed for P8.3-trillion infra projects

Economic managers are already eyeing the returns they expect from the Maharlika Investment Fund (MIF) as a source of funding for the Marcos  administration's big-ticket infrastructure projects, even before the sovereign wealth fund has been signed into law.

According to Bernadette Reyes’ report on “24 Oras” on Thursday, the officials touted the government's 194 infrastructure projects amounting to P8.3 trillion during an economic briefing on Thursday in Singapore.

Included in the Build Better Program are infrastructure projects related to connectivity, water resources and agriculture. More than half of its budget will come from the Official Development Assistance (ODA) and 30% from Public-Private Partnerships. A portion is now expected to come from the MIF.

“We want the Maharlika Fund to be able to finance some of them, not all of them, okay? We have identified another source of funding for this very important infrastructure project that will make a difference in the landscape of the Philippine economy,” Finance Secretary Benjamin Diokno said.

“We will graduate into an upper-middle-income country soon, maybe in a year or two, and that means we will not be entitled to the same ODA funding so that is another source of funds,” he added.

The economic managers made the same argument in a joint statement earlier in the week—that the Philippines' projected development into an upper-middle-income country would render it ineligible for cheaper borrowing from its development partners, so the MIF could be an alternative source of funding.

National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan previously said the administration’s goal of the Philippines becoming an upper-middle income economy might be achieved in 2025. He said one of the ways to achieve this is by luring more investors.

“One thing he [President Ferdinand "Bongbong" Marcos Jr.] noticed was that among ASEAN, among our dynamic neighbors, the Philippines has the lowest number of bilateral trade relations. What the president wants is to rapidly expand that,” he said.

Under the World Bank’s updated standards, an upper middle-income economy has a gross national income (GNI) per capita of between $4,046 and $12,535.

In 2019, the Philippines was categorized as a lower-middle-income country with a GNI per capita of between $1,006 and $3,955.

Meanwhile, Department of Budget and Management Secretary Amenah Pangandaman said the administration will allocate enough funding for struggling sectors.

“We have allocated much of the budget to social transformation, meaning, education will corner 17% of the budget, the health sector will get a boost of 19%, and food security, increased by 30%. Social protection, to ensure no one is left behind in terms of cash assistance and cash programs,” she said.

Marcos has yet to sign the MIF bill into law, which would establish the country’s first sovereign wealth fund. 

Other economists have expressed their concerns about the proposed fund, saying that its objective remains unclear and that there appears to be some confusion about the source of the funds to be used.

Diokno, who believes the fund can be fully operational before the year ends, has said that while the Congress-approved version of the Maharlika bill prohibits government-run pension funds and health insurance from investing in the MIF, the Government Service Insurance System (GSIS) and Social Security System (SSS) would still be able to “subscribe” to the MIC’s (Maharlika Investment Corporation) activities on a project level if they deem it advantageous to do so.

Senate Minority Leader Aquilino Pimentel III, meanwhile, sought the recall of the bill to address "glaring errors and discrepancies" in the "hastily approved" measure.

The Bangko Sentral ng Pilipinas (BSP) said it is monitoring factors that may affect the country’s economy after the inflation rate slowed down. Among these are the possible fare hike, effects of El Niño, global events, and increases in wage and food prices.

“We've always looked at the risk of lower GDP [gross domestic product] globally and that would mean lower trade with our partners and lower domestic economic activity which would feed on the price,” BSP Deputy Governor Francisco Dakila said.—LDF, GMA Integrated News