Finance Secretary Benjamin Diokno supports the immediate passage into law of the proposed Maharlika Investment Fund bill because it will serve as a growth catalyst to strengthen the domestic economy’s resilience against increased global uncertainties.
“The expeditious establishment of the Maharlika Investment Fund will provide the government cushion against external headwinds that now imperil the attainment of our near- and medium-term macroeconomic and fiscal targets,” Diokno said over the weekend.
Diokno cited the April 2023 World Economic Outlook, where the International Monetary Fund downgraded its global growth projection for this year from 2.9 percent to 2.8 percent on account of stubborn inflation, the prolonged war in Europe, a continuation of interest rate hikes in advanced economies, and the emergence of banking sector fragilities.
Diokno said while the Development Budget Coordination Committee decided to retain its growth target for this year at 6 percent to 7 percent, it also acknowledged the challenges brought about by these unfavorable external developments and has emphasized the need for timely policy interventions in order to sustain the high-growth momentum.
“The enactment of the Maharlika Investment Corporation [MIC] is precisely what is needed to negate the impact of weaker external conditions on the economy as it will introduce a new growth catalyst in the form of accelerated implementation of strategic and high-impact large infrastructure projects that will stimulate economic activity in the near-term and broaden economic potential in the long-term without the cost of additional financial burden to the government,” Diokno said.
Maharlika Investment Corporation is a government company that will manage the pooled money for investment in the Maharlika Investment Fund.
Last year, the economy grew by 7.6 percent, surpassing the target range of 6.5 to 7.5 percent. This year, however, the government projected a slower 6 to 7 percent expansion, taking into account the risks coming from the external front.
Earlier, Diokno expressed confidence about the financial strength of the Bangko Sentral ng Pilipinas, saying its contribution to the Maharlika Investment Fund would not threaten the financial stability of the country.
He said the BSP’s financial condition now is much better than when its revised charter was being deliberated upon.
Diokno said the contributions being asked from BSP for the first two years of the MIF, for a maximum of P50 billion, are dividends declared in favor of the national government.
He said that is the net profit of BSP and the national government decides how to use it and estimates that BSP’s dividend for the national government in 2022 would be in the neighborhood of P30 billion.
“In addition, the BSP was granted additional tools to conduct its primary mandates. At the height of the pandemic, when I was BSP Governor, BSP extended a loan of P540 billion — repeat, P540 billion — interest-free to the national government. To help the country during its economic distress. That’s how good BSP’s finances are,” Diokno said.
The Maharlika Investment Fund Bill was approved by the Senate last week after more than 12 hours of deliberations. The House of Representatives approved its version in December last year. The President earlier certified the bill as urgent.
Malacañang said it will review the structure of MIF before it is signed into law to make sure that necessary infrastructure projects would be funded by proceeds of the fund.