The establishment of a sovereign wealth fund is “appropriate” despite the risks of a global recession and high interest rates, Socioeconomic Planning Secretary Arsenio Balisacan said on Saturday.
“It’s always the right time,” Balisacan, the Marcos administration’s chief economist, told reporters. “The participation of funds like this as a vehicle for attracting resources is, I think, appropriate at this time.”
The National Economic and Development Authority (NEDA) secretary-general was asked if the economic conditions, given the looming global recession and high interest rates, were appropriate to establish the Maharlika Investment Fund (MIF), which could be tapped to finance the country’s economic development in the future.
On Thursday, the House of Representatives approved on third and final reading House Bill 6608, which was certified as urgent by President Ferdinand Marcos Jr.
The proposed measure seeks to maximize the investible funds of state-run financial institutions and ultimately increase public funds for nation-building.
Speaker Martin Romualdez on Friday said the House raised the amount earmarked from the profits of the MIF for social welfare purposes or “ayuda” (subsidies) from 20 percent to 25 percent as proposed by an opposition lawmaker.
“We have increased the contributions of the profits of the Maharlika Investment Fund to social welfare fund that the government can utilize to provide assistance to those who need it the most. This amendment was proposed by the Makabayan bloc, which we accepted,” Romualdez said.
Under the bill, the MIF would be funded by the investible resources of the Land Bank of the Philippines (P50 billion), the Development Bank of the Philippines (P25 billion), and the dividends or profits of the Bangko Sentral ng Pilipinas.
“I think the primary consideration here now is our need for vehicles that will attract investment funds, which we can use for our development needs,” Balisacan said.
“We are aiming for a rapid transformation of our social and economic sectors and that will require a lot of resources,” he added.
Amid criticisms that the government must focus on reducing poverty incidence instead of creating a sovereign wealth fund, the NEDA chief said that “solving poverty requires a lot of investments.”
“That’s what we’re trying to do,” he said. “We’re trying to attract all forms of vehicles that we can tap, including funds like this.”
Balisacan noted that public-private partnerships, official development assistance, and the national budget, along with the MIF, are all needed “to enhance our ability to accelerate and ramp up the investment requirements enshrined in our Philippine Development Plan and Ambisyon Natin 2040.”
“We need to move beyond business as usual. We need to be more ambitious compared to what we have been doing in the last four decades,” he added.
The MIF was envisioned as an effective vehicle to execute and sustain high-impact infrastructure projects, urban and rural development, agricultural support, and other programs that would generate more income and economic activities.