MANILA (UPDATE 2) — State-run pension funds SSS and GSIS will be removed as contributors in the proposed Maharlika Wealth Fund (MWF), a ranking lawmaker said on Wednesday.
The government will also no longer allot money for the MWF in the national budget, said House Appropriations Committee Senior Vice Chair Marikina Second District Rep. Stella Quimbo.
The development came after the public, as well as legislators, expressed concern toward the proposal, with the use of pension funds as one of the main contentions.
The revisions were made as House leaders, led by Speaker Martin Romualdez, met with the country's economic managers to reassess the Maharlika Fund bill, said Quimbo.
"Based on our assessment of the proposed changes put forward by the economic team, we are amending the bill to change the fund sources, removing GSIS and SSS as fund contributors and instead utilize profits of the Bangko Sentral ng Pilipinas," she said in a statement.
Quimbo said they also decided to drop the MWF funding from the annual national budget because it would affect the fiscal deficit. They decided to limit MWF contributions to the Land Bank, DBP and dividends from the BSP to ensure that Maharlika will be “deficit-neutral.”
“Therefore because these are off-budget items it's going to be deficit neutral. Di siya magkaka-impact dapat sa deficit." Quimbo told the media in a press conference.
An earlier version of the bill said the Maharlika fund would be seeded with P275 billion from government financial institutions, including the 2 pension funds, the state-run Land Bank and DBP, and the BSP. The funds would also be "exempt from any regulatory restrictions."
But Quimbo said they have no target seed capital amount.
"Wala naman talaga target amount na kailangan makapag raise ng P250 billion or P275 billion kailangan lang ng isang amount that's big enough to be able to start an investment fund,” Quimbo said.
House Appropriations Committee will decide on Friday the exact amounts that will be contributed by the funding sources.
She said the BSP was part of the discussions, which led to the decision to use its dividends for the Maharlika Fund.
"Yung exact amount ay malalaman natin sa Friday peromnhg mga indicative amounts pero hindi ko na ipepreempt hayaan na natin manggaling mismo sa BSP sa darating na hearing sa Biyernes." Quimbo said.
The BSP earlier said it was concerned over plans to use part of the country’s gross international reserves (GIR) for the Maharlika fund. It said this may impact the central bank’s ability to manage foreign exchange swings such as the recent rapid depreciation of the peso versus the US dollar.
Quimbo said the central bank’s participation in the meeting showed that BSP Governor Felipe Medalla's reservations about the GIR have been addressed.
She reiterated that the bill will have safeguards.
"As we tackle the bill, we will put in place safety nets that will be the success of this project," Quimbo said.
Opponents of the Maharlika fund meanwhile said the removal of SSS and GSIS contributions was a “victory.”
"But we must still be vigilant because funds from the General Appropriations Act (GAA) and special appropriations are still included and taxpayers are still the ones to pay the sovereign guarantee of the MWF," said House Deputy Minority Leader and ACT Teachers party-list Rep. France Castro.
Economists and some of the country’s largest and most influential business groups earlier said they were concerned over the use of pension fund money for Maharlika.
Public interest lawyer Chel Diokno also warned that using money from GSIS and SSS was illegal.
Independent think tank Action fro Economic Reforms also said Maharlika “is essentially a ‘behest’ transfer by ordering entities like the GSIS, SSS, Development Bank of the Philippines (DBP), Land Bank of the Philippines (LBP), and the Banko Sentral ng Pilipinas (BSP) to participate by quota when there is no inherent reason for these to do so.
“It undermines the autonomy of their investment decisions and pre-empts their portfolio choices, not necessarily in an optimal fashion” the group said.
Proponents of the bill meanwhile said it would help the Marcos administration achieve its goals of getting the Philippine economy to "soar to greater heights in spite of external shocks."
"Sa taumbayan din ang balik ng kita ng investments ng Maharlika na mararamdaman sa mas mataas na budget para sa mga programa ng gobyerno na tutugon sa pangangailangan ng bawat Pilipino," Quimbo said.
Earlier Wednesday, House Majority Leader Manuel Jose Dalipe said the House will vote on the bill on second reading this December.
—with a report from RG Cruz, ABS-CBN News