Lumalangoy tayo sa dollars! Diokno goes all out for Bongbong’s Maharlika Fund, eyes launch in mid-2023

Finance Secretary Benjamin Diokno has shot down warnings by his fellow University of the Philippines economists on the ill effects of the controversial sovereign wealth fund (SWF), specifically on the central bank’s ability to defend the peso.

In an interview with journalists after the economic managers’ meeting on Monday, November 4, Diokno assured the Bangko Sentral ng Pilipinas has a deep arsenal of foreign exchange, a part of which could be diverted to the Maharlika Investment Fund, a pet project of President Bongbong Marcos.

Diokno pointed out that the country’s gross international reserves are good for 7.5 months of the country’s import bill, or more than double the three-month forex reserves standard.

“Sobra sobra pa rin ‘yun… that’s too much ammunition,” said Diokno.

Diokno was reacting to a statement of concern signed by 12 business groups, including his peers from the UP School of Economics Alumni Association (UPSEAA), which zeroed in on a provision in the House bill creating the Maharlika Fund requiring the BSP to contribute 50 percent of its cash dividends to the SWF.

The UPSEAA and other concerned groups believed this was “problematic in many aspects” as this would be a “direct assault” on the independence of the BSP and would deprive the BSP of much needed capital to regulate the foreign exchange market.

The groups also warned that sequestering the dividends of government owned and controlled corporations (GOCCs) to the SWF
would impair the government’s ability to fund its budget shortfall and force it to go deeper in debt
“We see no guarantee that this diversion of funds will result in
higher returns to the national government but instead more definitely result in
higher interest rates and greater crowding out of private sector investments,” said the groups opposing the Maharlika Fund.

But Diokno turned a deaf ear to these protests as as he expressed confidence the Maharlika SWF would likely be launched by the middle of 2023.

“ It will take a while because it needs to be organized,” said Diokno.

Last week, the House Committee on Banks and Financial Intermediaries approved the proposed Maharlika Fund which Diokno claimed the country needed to solve its chronic lack of capital to bankroll its infrastructure projects.

The Government Service Insurance System will contribute the highest share at P125 billion, followed by the Social Security System and the Land Bank of the Philippines with P50 billion each, and the Development Bank of the Philippines and the Bureau of the Treasury with P25 billion each.

Diokno said the government could increase its share to as much as P100 billion.

He said royalties to be gained by the government from mining projects can also be used for the SWF.

Diokno said the government could also allow foreign investors to contribute the SWF.

(with a report from PNA)

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