The establishment of the Maharlika Investment Fund (MIF) will prepare the Philippines to sustain and complete its development programs and projects as the country aims to become an upper middle income country by 2025, an official of the National Economic and Development Authority (NEDA) said on Saturday.
NEDA Undersecretary Rosemari Edillon said in a news forum in Quezon City that the Philippines was preparing for its transition to becoming an upper middle income country by 2025, as outlined in the Philippine Development Plan (PDP) for 2023 to 2028.
Edillon said this transition will have significant implications for the country’s fiscal situation and access to concessional loans, like the Official Development Assistance (ODA).
“‘Pag naging upper middle income country po tayo, hindi na po tayo qualified—siguro may grace period na two years ‘yan… hindi na tayo qualified sa mga concessional loans,” she said.
The NEDA official said concessional loans offer low interest rates and extended grace periods to countries with below upper middle income status.
Once the Philippines achieves its target status, Edillon said the country will have to rely on market rates for debt financing, which would be challenging for the government.
Edillon pointed out that due to the impact of the COVID-19 pandemic, the Philippines was unable to raise its credit rating to achieve the desired creditworthiness, which could have improved debt financing conditions.
“Isa na ‘to sa mga layunin namin noong previous administration na marating natin ang Credit A. Kasi ‘pag Credit A ka, mababa ‘yung risk premium mo so maganda pa rin iyong debt financing. Pero dahil hindi nga natin naabot iyon dahil nga sa COVID-19, so kailangang maghanap ng tinatawag na innovative ways of financing – iyong ating infrastructure, iyong ating mga kakailanganin pa sa investment,” she said.
To address this challenge, Edillon said the government was exploring innovative ways of financing income-generating programs and attracting investments, one of which is the establishment of the MIF.
Edillon said the MIF aims to attract equity financing rather than debt financing, which allows investors to become partners in projects, sharing in the risks and rewards of the venture, such as the flagship infrastructure programs of the Marcos administration.
At present, Edillon said the MIF is an enrolled bill, which will undergo legal scrutiny, awaiting the President’s approval.
Once enacted, she said the MIF will provide an additional avenue for development financing, particularly for projects that are considered risky but strategically important and have the potential for long-term returns.
Meanwhile, Edillon said the government is now working on the implementing rules and regulations (IRR) of the MIF, which will help facilitate its operation and contribute to the country’s future investment and expenditure needs.
“Ginagawa na ‘yung IRR nito. Now, in terms of the impact, like any investment, hindi naman ganoon din kabilis natin ‘to na makikita,” she said.
“Kailangan kasing magawa na siya ngayon. Umpisahan nang i-establish ngayon para ‘pag 2025, upper middle income na tayo, we’ll be given a grace period of two years kunwari… by that time, tamang-tama up and running na itong ating Maharlika Investment Fund. Kumbaga meron na tayong isa pang kabayo para doon sa ating development agenda,” she added.
In terms of specific areas for investment, the NEDA executive said the government has identified several infrastructure flagship projects that can generate income or revenue, including airports, water supply systems, and toll roads, among others.
These projects offer potential revenue streams that can contribute to the financing of the country’s development goals, Edillon said.