The Maharlika Investment Fund (MIF) will not have a negative impact on the national budget, Finance Minister Benjamin Diokno said on Friday.
“The budget provides from 5.0 to 6.0 percent of infrastructure spending. If our PPP (public-private partnership) and Maharlika aspirations come true, we can easily count on 10 to 12 percent of GDP (gross domestic product) infra-spending. ),” Diokno said during the 185th DBCC press briefing.
“[There will be] no negative impact on the budget. The only contribution of the national government here is initially 50 billion pesos coming from the BSP (Bangko Sentral ng Pilipinas) is a dividend,” he added.
The central bank’s contribution to the fund will be reduced to 50 percent of its dividend after the first two years. The remaining 50 percent will then be transferred to the national government for BSP capitalization growth.
MIF will also receive seed funding from the Land Bank of the Philippines, the Development Bank of the Philippines, Philippine Amusement and Gaming Corp., as well as proceeds from privatization and transfer of state property.
“LandBank’s contribution is 50 billion pesos and DBP is 25 billion pesos, which is very small compared to their investment funds,” Diokno said.
“Why is it profitable for them to invest in Maharlika? [that] If [they] invest money with Maharlika, [they] can earn up to 8.4%, and the additional 50 billion and 25 billion pesos are only 3.0% of their total investment funds,” he added.
Diokno previously said the fund would provide the government with a cushion against external headwinds that jeopardize the administration’s short-to-medium-term macroeconomic and fiscal goals.
The national government’s revenue base, Diokno said, will remain stable as its priorities, such as infrastructure, can be pursued by Maharlika Investment Corp. through joint ventures and joint investment schemes with multilateral institutions and private investors.
The Minister of Finance said that the adoption of the law on the creation of mutual funds is exactly what is needed to level the impact of weaker external conditions on the economy.
This will bring a new growth accelerator in the form of the rapid implementation of vital infrastructure projects, which will help economic activity in the short term and expand economic potential in the long term without increasing the financial burden of the government.
For her part, National Treasurer Rosalia de Leon has already said the government will be “very aggressive” to secure resources for the MIF.
Diokno expects MIF to be fully operational before the end of the year.
“We are expected to prepare implementing rules and regulations [for the Maharlika Fund law] and then we are looking for people to staff Maharlika Investment Corp.,” Diokno exclaimed.
The finance minister said the bill would likely be signed into law by President Ferdinand Marcos Jr. ahead of the president’s second address to the nation in July.