MANILA — Former Bangko Sentral of the Philippines Governor Felipe Medalla on Friday got candid about the Maharlika Investment Fund (MIF), and aired his concerns on the newly-passed measure.
Medalla, who stepped down from his post last July 2, admitted that he wanted to stay out of the discussion because for him, the MIF would just result in additional borrowing.
"Anything that goes to the fund is additional borrowing because the entire country has a deficit. Even the BSP dividends. That dividend goes to the national government and it reduces the borrowings of the national government," Medalla said during a lecture at the University of the Philippines School of Economics (UPSE).
"So if those dividends goes to Maharlika, then the government has to borrow more,” he said.
“The Landbank and [Development Bank of the Philippines] are buyers of government securities. If they’re required to invest in the fund, there’ll be lower demand for government securities. The government has to find new lenders,” he added.
Medalla also said he was "embarrassed" that one of the UPSE’s top graduates supported Maharlika.
He did not say who exactly he was referring to but besides Medalla, other members of the the Marcos administration's economic team who also came from the UPSE include Finance Secretary Benjamin Diokno and National Economic Development Authority (NEDA) Secretary Arsenio Balisacan.
As a BSP governor, Medalla initially frowned on the proposal to use the central bank’s reserves as seed money for the MIF.
But he later signed off on the measure, along with the rest of the Marcos administration’s economic managers, after lawmakers made some changes and added safeguards to prevent it from being abused.
“I spoke out that it was something that I was not in favor of. But at the same time, later on, there were a lot of changes like, it is no longer primarily an asset management fund but something that will be developed for strategic investments,” he said.
Now that it has been enacted into law, Medalla said only time will tell how it would turn out.
“The law is there now. Let’s see how it can be less a danger to the Philippine economy in the future,” he said.