By Julito G. Rada and Othel V. Campos
Finance Secretary Benjamin Diokno on Monday sought to assuage the concerns expressed by different groups on the proposed P275-billion Maharlika Wealth Fund.
“There will be an internal audit as well as external audit, not to mention the oversight committee of Congress… Let us have trust in ourselves… We are an open society, and we are not like other countries,” Diokno said during an interagency Development Budget Coordinating Committee briefing.
Government Service Insurance System president Wick Veloso said the government would ensure that the wealth fund would be transparent. “What we need is an investment strategy.. .We want to do this to help our economy…I will make sure that their [GSIS members’] money is protected,” he said.
Monetary Board member Bruce Tolentino said the Bangko Sentral ng Pilipinas supports any effort of the national government to widen its fiscal space. “We want to make sure that DBP [Development Bank of the Philippines] and LandBank [of the Philippines] will remain strong… We will check with potential investments in Maharlika,” Tolentino said.
Business groups expressed concern over the plan to create the country’s first sovereign wealth fund. “We register our serious concerns and reservations against the proposed MWF on the principles of fiscal prudence, additionality, solvency of social pension funds, contingent liabilities, monetary independence of the Bangko Sentral ng Pilipinas, government in the economy and transparency,” the groups said in a statement.
The groups include the Foundation for Economic Freedom, Competitive Currency Forum, Filipina CEO Circle, Financial Executives Institute of The Philippines, Institute of Corporate Directors, Integrity Initiative Inc., Makati Business Club, Management Association of The Philippines, Movement for Good Governance, Philippine Women’s Economic Network, UP School of Economics Alumni Association and the Women’s Business Council Philippines Inc.
The groups said in a joint statement the Philippines has neither commodity-based surpluses, nor surpluses from external trade from which the government can tap as source for the SWF.
Moreover, government-owned-and-controlled corporations are also far from generating large operating surpluses, they said.
The groups asked the government to focus on managing fiscal deficit and the public debt to avoid a downgrade of the country’s credit rating and use revenues to cover public expenditures.
“Instead of leaving a legacy of surplus funds to be managed for future generations, the current generation is leaving a legacy of heavy indebtedness which future generations need to pay or refinance. There is no need, or even justification, to pool the reserves of government financial institutions (GFIs) and pension funds into larger amounts in order to earn higher returns,” the statement read.