Senators cast doubt on the Maharlika fund's promise that a sovereign wealth fund could reduce the Philippines' reliance on debt.
“The Philippines has a high level of debt-financed programs, and no new sources of funds have come into consideration since the MIF discussions started. And because instead of paying debt, we are putting up a SWF, in effect, the Philippines is borrowing the money for the SWF. We should perhaps call it a sovereign liability fund as it is effectively funded by liabilities,” Senator Risa Hontiveros said in the hearing, quoting a former bank president.
However, this hope that the establishment of the MIF could attract lucrative investments and consequently lower the country’s debt was among the fund’s many promises that senators challenged. Finance Secretary Benjamin Diokno also said that the government could sell unused or underutilized assets, such as the Caliraya hydropower plant. The government also owns a building in New York and four properties in Japan that they could consider selling.
However, Hontiveros pointed out that it’d still be possible to pursue lucrative development projects even without creating a new entity like a sovereign wealth fund. Representatives from both the Land Bank of the Philippines and Development Bank of the Philippines confirmed that they could theoretically invest in a project like a toll road.
“Parang pinuwersa mo ‘yung dalawang bangko, even PAGCOR, to give money. Wala akong nakita sa bill na may share sila on their investmentDe Leon agreed that the bill needed to be more explicit, but she explained that a part of the fund’s profits will be given to Landbank and DBP. “It will be a gaping loophole insofar as entities selling to the MIF, MIC is considered because they will claim its sold to them even if it’s not and then claim the exemption,” he said.
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