Leaders of the House of Representatives are furious at Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla for putting them and President Ferdinand Marcos Jr. in a bad light over the proposed creation of the Maharlika Wealth Fund (MWF).
A Babbler said the administration’s economic team, led by Finance Secretary Benjamin Diokno, has been lobbying Marcos for the creation of a sovereign wealth fund (SWF) as a catalyst for growth even before the President assumed office.
“It was Diokno who suggested to the President that the BSP’s dollar reserves be utilized as seed money for the capital fund. The House leadership agreed to make the wealth fund a priority bill,” the Babbler said.
Based on Diokno’s plan, BSP can afford to invest a quarter of its $100 billion gross international reserves (GIR) to put up as much as P1 trillion in seed money into the SWF without impairing its ability to stabilize the local currency.
By the estimates of Diokno, who was Medalla’s predecessor at BSP, $25 billion in reserves was enough to defend the peso. He got the all out support of Marcos and the House leaders in his push to legislate the MWF to facilitate the GIR diversion.
House leaders, however, felt betrayed when Medalla started dissing the MWF despite being part of the economic team which pushed for its creation.
During early discussions on the MWF, Medalla– who got his post with the backing of Diokno– rejected the diversion of GIR and suggested that the BSP’s contribution be limited to its annual profit, which it remitted to the government anyway.
The Babbler said Medalla’s sudden about face on the MWF prompted the Government Service and Insurance System (GSIS) and Social Security System (SSS) to step forward and chip in P125 billion and P50 billion, respectively, to the MWF.
“It’s Medalla’s fault why the GSIS and SSS joined the funding pool. Now that they backed out of the fund due to the pushback from the public, Medalla wants to paint himself as the MWF’s savior,” the Babbler said.
As per the Babbler’s account, House leaders had several meetings to discuss the terms and fund sources of the MIF but Medalla was always absent because he was either busy or abroad hobnobbing with personalities from the International Monetary Fund-World Bank set.
“Medalla couldn’t even be bothered to join the meetings even on Zoom when he’s abroad. But he made time to be interviewed on international TV and throw the economic team under the bus by criticizing the fund,” the Babbler said.
Medalla told Bloomberg TV on December 5 that the BSP was wary of investing its dollar reserves in the MWF, which he feared could end up ike the corruption-tainted 1Malaysia Development Berhad. His words further fanned the opposition against the creation of a sovereign wealth fund.
House leaders accuse Medalla of being “unpatriotic” for choosing to invest the GIR in United States Treasury bonds.
“Medalla is helping the US economy, not the Philippines. He listens more to the dictates of his friends in the US and IMF-WB. BSP has a lot of idle money we should be using to invest in the country like dams or mineral processing plants,” the Babbler said.
“House leaders are branding him a traitor. Pinahiya niya ang buong economic team, pinasubo niya ang Congress,” the Babbler added.
Medalla, who has been a Monetary Board member since 2011, is set to step down as BSP governor on July 3, 2023 since he’s merely serving Diokno’s remaining term. Marcos could reappoint him for a fresh, six-year term but the Babbler said this is unlikely given the chaos he created in connection with the MIF.
Perhaps worse than the looming end of Medalla’s BSP stint is the possibility that he would be impeached by House lawmakers because of his self-promotion stunt.
