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GSIS, SSS dropped as mandatory sources of capital for Maharlika Fund

Authors of the proposed Maharlika Wealth Fund (MWF) have dropped state pension funds Government Service Insurance System (GSIS) and Social Security System (SSS) as mandatory contributors to the proposed sovereign wealth fund, House appropriations panel senior vice chairperson Stella Quimbo of Marikina City said Wednesday.

Quimbo, one of the authors of the bill proposing the fund, said the decision was reached after they met with economic managers on Wednesday morning, including Bangko Sentral ng Pilipinas Governor Felipe Medalla who earlier expressed opposition to the measure.

“Na-validate iyong agam-agam of our pensioners, lalo na ang masisipag na manggagawang Pilipino na buwang-buwang naghuhulog [sa GSIS and SSS],” Quimbo said in a news conference.

(The fears of our pensioners were validated, especially the hardworking Filipinos who make contributions to GSIS and SSS every month.)

“That is why we decided that we won’t compel the GSIS and SSS to contribute. After all, the goal of this fund is to look for a surplus fund to be an investment vehicle for higher returns that will yield a higher budget for government programs," Quimbo added.

Aside from GSIS and SSS, also removed from mandatory contributors to MWF is the General Appropriations Act or the national budget law.

As a result, Quimbo said, the seed money will now come from the state-run banks LandBank of the Philippines (P50 billion), the Development Bank of the Philippines (P25 billion), and the dividends/profits of the BSP.

“Nakita natin kung saan galing iyong takot [ng tao]. Importante ang concerns ng tao, importante na makita [natin] ito at matugunan,” she said.

(We saw where the people’s fears were coming from. The concerns of our people are important, and it is important that we hear and respond to those concerns.)

“We will know the amount on Friday. It will not be considerably smaller. The amount [left] will still be big enough to start an investment fund,” Quimbo added, referring to the committee deliberations on the measure on Friday.

The proposed use of the pension funds' investible funds for the wealth fund drew criticism from different quarters, with former Supreme Court associate justice Antonio Carpio saying it is unconstitutional—which was then countered by GSIS President and General Manager Jose Arnulfo “Wick” Veloso, who said that any returns from the investments would only go to the pensions' members.

Business groups also voiced their concerns about the proposed fund "on the principles of fiscal prudence, additionality, solvency of social pension funds, contingent liabilities, monetary independence of the [BSP], government in the economy, and transparency."

Finance Secretary Benjamin Diokno, meanwhile, said that the central bank—of which he was governor from 2019 to earlier this year—had “too much” gross international reserves and that some could go to the wealth fund.

Quimbo said that current BSP governor Medalla, who was initially opposed to the Maharlika fund, has been "reassured" that the Maharlika fund would only tap BSP’s profits.

“He was reassured because we are not getting the BSP reserves but only the profit or the windfall. Example, on foreign exchange, the Philippine peso depreciated, and we sold dollars. That resulted in unexpected profit that we can use for investment under the Maharlika fund,” Quimbo said.

Quimbo said that the Maharlika fund will allow government financial institutions (GFIs) to raise huge amounts of funds at an unprecedented level necessary to achieve progress.

“As it is, the interest rate on GFIs’ investments are not that high-yielding. Kung pinagsama-sama ang kita [ng mga GFIs], tataas ang interest doon sa [investment] placement [ng Maharlika fund], kikita ang GFIs. And under Dividends law, kapag kumita ang GFIs at GOCCs, kalahati nun ay mapupunta sa national government,” Quimbo said.

(If we pool the GFIs' earnings, the interest rate will go up, the GFIs will earn, and when GFIs earn, half of the earnings goes to the government under our Dividends law.)

“Kaya kailangan tayong humanap ng paraan para lumago ang kita nila at lumago ang ating pondo. We just passed our budget [for 2023], and it is frustrating na iyong P5.268 trillion ay talagang kulang,” Quimbo said.

(We really need to look for ways to help GFIs earn so we would have additional public funds. We just passed our budget, and it is frustrating that P5.268 trillion is really not enough.)

Quimbo said that there is still a huge unmet funding requirement for social services such as government subsidy, hospitals, education, airports, bridges and flood control projects.

“Kulang na kulang talaga. Kaya ito ang pinanggagalingan nito [Maharlika fund bill]. Kung hindi natin babaguhin ang paraan ng paghahanap natin ng pondo, mahirap mag-modernize as nation,” she said.

(We really lack resources, and that is where the Maharlika fund initiative is coming from. If we don’t change our ways, it will be tough for our nation to modernize.)

“Kailangan natin ng game changer na paraan para dumami ang ating pondo in an exponential way,” she added.

(We need a game changer to generate public funds in an exponential way.)

Aside from Quimbo, other authors of the measure are Speaker Martin Romualdez of Leyte, Ilocos Norte Representative Sandro Marcos, Tingog party-list Representative and House accounts panel chairperson Yedda Romualdez, Zamboanga City Representative Mannix Dalipe, and Tingog Sinirangan Representative Jude Acidre.

The National Treasury earlier said the MWF has enough safeguards. — BM, GMA Integrated News