National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan on Wednesday assured the public that the signing of the Maharlika Investment Fund will not affect the 2024 national budget.
In a briefing in Malacañang, Balisacan said that the money put in the sovereign wealth fund are idle funds and not funds included in the P5.77-trillion national budget.
“And what the fund is trying to do is to put those into more productive, higher-yielding instruments so that you can earn more from those funds,” the NEDA secretary said.
He added that the Maharlika fund will allow the country to decrease its reliance on debt.
Asked about the selection of its board members, Balisacan said that there is a need to define and develop the guidelines.
He added that those guidelines should be publicly accessible to ensure transparency.
The Maharlika Investment Fund bill was signed into law by President Ferdinand Marcos Jr. on July 18.
Under Republic Act (RA) 11954, the MIF would be used to invest in a wide range of assets, including foreign currencies, fixed-income instruments, domestic and foreign corporate bonds, joint ventures, mergers and acquisitions, real estate, and high-impact infrastructure projects for the attainment of sustainable development.
RA 11954 also establishes the Maharlika Investment Corp. (MIC), which will serve as the investment body responsible for the overall governance and management of the MIF.
The MIC is expected to have at least P75 billion in paid-up capital this year, with P50 billion sourced from the Land Bank of the Philippines and P25 billion from the Development Bank of the Philippines.
Balisacan said the MIF could be tapped for the implementation of any of the 194 high-impact infrastructure projects approved by the NEDA Board chaired by Marcos.
The MIC, he added, would be the one to decide, taking into consideration the risk capital and the rate of returns “because the rate of returns across these projects may vary.”
Speaker Ferdinand Martin G. Romualdez, meanwhile, hailed President Marcos’ decision to insulate Maharlika Investment Fund’s handling from politics, saying it is a prudent move that augurs well for the success of the country’s first-ever sovereign wealth fund.
On Tuesday, Mr. Marcos said he rejected proposals for him or the secretary of Finance to chair the MIF, saying that it must be run by competent and independent financial managers to insulate it from political interference.
“President Marcos’ demand for MIF investment decisions and management to be predicated solely on sound financial and business practices manifests his resolve to ensure the fund is adequately safeguarded and would grow to achieve its purpose,” said Romualdez, who is one of the principal authors of the House version of the bill creating the MIF.
“It is a prudent move on the part of the President that would bolster its potential to achieve its purpose of mobilizing additional funds without the need for additional borrowings or taxes to accelerate the implementation of flagship infrastructure projects meant to sustain the country’s robust growth,” he added.
Romualdez noted that in a recent meeting, new Singaporean Ambassador Constance See said “sovereign wealth funds, when managed properly can really promote economic development, increase revenue, and boost national savings.”
The envoy said the city-state’s sovereign wealth funds, namely GIC (Government of Singapore Investment Corp.) Private Limited and Temasek, along with its Central Bank remit dividends amounting to about 20 percent of the country’s national budget.
“With competent managers of proven track record and unquestioned integrity running the MIF, I am confident that it would eventually provide significant contributions to widen our fiscal space to finance projects that would create jobs and uplift the lives of our people,” Romualdez said.
Also on Wednesday, Senate President Juan Miguel Zubiri said he was confident the MIF won’t be misused as Congress had put enough safety nets into the law. These guaranteed that no funds would be wasted or stolen, he said.
“I am proud that we have put many pages on ‘safeguards,” Zubiri said, including two pages of penalties for the misuse of the fund.
Deputy Speaker and Batangas Rep. Ralph Recto on Wednesday urged the economic managers to prove their critics wrong now that their pet MIF is a law and deliver the earnings they confidently promised during the congressional debates on the measure.
“The next order of the day is to shut down the critics. And because they have stuck out their necks for this, their professional reputation is also on the line. This is not just business, but personal,” Recto said.
As in the case of new things which were initially doubted, Recto said “brickbats can incentivize performance and [can be] a powerful motivation to prove the naysayers wrong.”