NEDA’s Balisacan: Maharlika fund won’t increase PH debt

On the heels of the release of latest data showing the government’s debt ballooned to a new record high, National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan said the creation of the Maharlika Investment Fund (MIF) will not further increase the country’s debt.

At the sidelines of a forum in Makati City on Wednesday, Balisacan said the MIF has a “small” initial capitalization to make an impact on the country’s fiscal health.

“I don’t think so. That’s a small [amount] of P125 billion to P500 billion capitalization,” the NEDA chief said when asked if the MIF will further bloat the country’s debt stock.

This, after the Bureau of the Treasury reported that the national government’s outstanding debt stood at P13.911 trillion as of end-April 2023, up 0.4% from P13.856 trillion as of end-March 2023, mostly due to the weakening of the peso, which increased the local currency equivalent of foreign obligations during the period.

Balisacan said the MIF will be invested in profitable sectors such as infrastructure and energy projects.

“We have a Medium Term Fiscal framework to address the issue of debt, deficits, macroeconomy, and the economy so I’m not too worried about it [debt],” he said.

Under the Medium Term Fiscal Framework, the administration is targeting to bring down the debt-to-gross domestic product (GDP) ratio to less than 60% by 2025, then further down to 51.1% in 2028, and reduce the budget deficit to 3.0% of GDP by 2028.

The debt-to-GDP ratio represents the amount of the government’s debt stock relative to the size of the economy.

As of the first quarter of 2023, the Philippines' debt-to-GDP ratio stood at 61%, down from 63.5% in the first quarter of 2022.

Meanwhile, the House of Representatives adopted the Senate version of the proposed MIF bill during the bicameral conference committee meeting Wednesday.

Following marathon deliberations, the Senate approved early Wednesday the proposed measure seeking to establish the sovereign wealth fund.

The bill states that the MIF would be created through the funds that will be sourced from:

•     Land Bank of the Philippines (LBP): P50 billion
•     Development Bank of the Philippines (DBP): P25 billion
•     National Government: P50 billion

Meanwhile, the contribution from the national government will come from the following sources:

•     Bangko Sentral ng Pilipinas' total declared dividends
•     National government's share from the income of PAGCOR
•     Properties, real and personal identified by the DOF-Privatization and Management Office
•     Other sources such as royalties and/or special assessments

Among the major amendments introduced to the bill was the absolute prohibition of the use of funds of the Government Service Insurance System (GSIS), Social Security System (SSS), Philippine Health Insurance (PhilHealth) corporation, Pag-IBIG, Overseas Workers Welfare Administration (OWWA), Philippines Veterans Affairs Office (PVAO) in the capitalization and investments in the Maharlika fund.

“The fact that it is now passed, I think, strengthens our platforms for investment because we, the economic team, has been saying we need to augment or complement the platforms that we have in engaging with the private sector, expanding investments in strategic areas,” Balisacan said.

On the changes made by the Senate, the NEDA chief said, “It’s fine. We respect the changes.”

Finance Secretary Benjamin Diokno earlier said board members of state pension institutions should not be "precluded" from deciding on possible investments in proposed sovereign wealth fund.—AOL, GMA Integrated News