Call to remove BSP, state banks as initial Maharlika fund source unhelpful –DOF

Finance Secretary Benjamin Diokno on Friday stood firm on the current composition of initial funding sources for the proposed Maharlika Investment Fund (MIF), which include the Bangko Sentral ng Pilipinas (BSP) and state-run lenders Land Bank of the Philippines and Development Bank of the Philippines (DBP).

“If you exclude BSP, Landbank, DBP… basically they don’t want it to continue. That’s the tenor of their suggestion. So where will we source it?” Diokno told reporters at the sidelines of the Asia CEO Forum in Pasay City.

The Finance chief was asked to comment on Foundation for Economic Freedom President Calixto Chikiamco’s suggestion to remove the central bank and state lenders as funding sources as they would be exposed to a single investment, adding that proceeds from the privatization of government assets must be tapped instead. 

Diokno agreed that funding can be sourced from privatization as well as mining revenues, but excluding the BSP, Landbank, and DBP meant the MIF should not be continued.

“Those kinds of suggestion means ‘do not continue it’… That's not helpful,” the Finance chief said.

The Marcos administration’s chief economic manager, during the forum, said that the P50 billion and P25 billion capital infusion coming from Landbank and DBP, respectively, are only 3% of the state lenders’ investible funds.

“BSP Governor [Felipe] Medalla, meanwhile, said it’s okay with them. The BSP is in a fairly good financial state at the moment,” Diokno said.

Under the proposed MIF bills filed in the Senate, the BSP will remit 100% of its dividends of about P100 billion to the sovereign wealth fund for two years.

The Finance chief said another P150 billion will be coming from the proceeds of the privatization of government assets.

Diokno added that prohibiting Landbank, DBP, and the BSP from contributing to the MIF’s seed money was effectively “denying them the privilege of earning a higher return,” adding the fund would be invested in high-impact infrastructure projects with a 10% economic return.

“Let’s see. We don't know what the Senate is going to do. It will go through some amendments and so we hope that this will be approved by the Senate after Holy Week,” he said.

The Finance chief earlier expressed opposition to the proposal to make the dividends from government-owned and controlled corporations (GOCCs) the initial funding source of the MIF as this would be tedious and would require amending the charters of state-owned firms. — DVM, GMA Integrated News