Carpio: Maharlika fund a 'losing proposition' | ABS-CBN
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Carpio: Maharlika fund a 'losing proposition'
Carpio: Maharlika fund a 'losing proposition'
Mike Navallo,
ABS-CBN News ABS-CBN News
Published Dec 16, 2022 04:34 PM PHT
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MANILA — Former Supreme Court senior associate justice Antonio Carpio and several former government officials on Friday warned of dire consequences should the bill establishing the Maharlika Investment Fund becomes a law.
MANILA — Former Supreme Court senior associate justice Antonio Carpio and several former government officials on Friday warned of dire consequences should the bill establishing the Maharlika Investment Fund becomes a law.
House Bill 6608 creating the Maharlika Investment Fund passed 3rd reading at the House of Representatives on Thursday with 279 legislators voting in favor of the measure and only 6 opposing it.
House Bill 6608 creating the Maharlika Investment Fund passed 3rd reading at the House of Representatives on Thursday with 279 legislators voting in favor of the measure and only 6 opposing it.
NOW: 1Sambayan holds online forum on the Maharlika Investment Fund bill.
Present are ex-SAJ Antonio Carpio, ex-COA Commissioner Heidi Mendoza, labor leader Atty. Sonny Matula, ACT NCR union president Ruby Bernardo, and ex-BSP deputy governor Diwa Guinigundo. pic.twitter.com/pnc7keLjxp
— Mike Navallo (@mikenavallo) December 16, 2022
NOW: 1Sambayan holds online forum on the Maharlika Investment Fund bill.
— Mike Navallo (@mikenavallo) December 16, 2022
Present are ex-SAJ Antonio Carpio, ex-COA Commissioner Heidi Mendoza, labor leader Atty. Sonny Matula, ACT NCR union president Ruby Bernardo, and ex-BSP deputy governor Diwa Guinigundo. pic.twitter.com/pnc7keLjxp
Speaking at a 1Sambayan online forum Friday, Carpio said Filipinos stand to lose if the proposed legislation pushes through.
Speaking at a 1Sambayan online forum Friday, Carpio said Filipinos stand to lose if the proposed legislation pushes through.
He explained the Philippine national government is currently operating on deficit spending and has been borrowing to finance the deficit for several decades.
He explained the Philippine national government is currently operating on deficit spending and has been borrowing to finance the deficit for several decades.
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The funds that will be invested, he said, are essentially borrowed funds with an annual interest of 6.9 percent.
The funds that will be invested, he said, are essentially borrowed funds with an annual interest of 6.9 percent.
Add to this the 2 percent limit the Maharlika Investment Fund Corporation is allowed to spend out of its funds for administrative and operating expenses.
Add to this the 2 percent limit the Maharlika Investment Fund Corporation is allowed to spend out of its funds for administrative and operating expenses.
In contrast, the Maharlika Fund is estimated to generate a 7 to 8 percent annual return for the investments, according to Carpio, citing one of the co-authors of the bill.
In contrast, the Maharlika Fund is estimated to generate a 7 to 8 percent annual return for the investments, according to Carpio, citing one of the co-authors of the bill.
“The Maharlika Investment Fund will be a losing proposition since its expected annual return is only 7 to 8 percent while the interest on its debt-funded equity plus its operating expenses will be 8.9 percent,” he said.
“The Maharlika Investment Fund will be a losing proposition since its expected annual return is only 7 to 8 percent while the interest on its debt-funded equity plus its operating expenses will be 8.9 percent,” he said.
“The annual cost of putting up and operating the fund will exceed the expected returns of the fund…Tayo malulugi. The public will pay in terms of taxes,” he added.
“The annual cost of putting up and operating the fund will exceed the expected returns of the fund…Tayo malulugi. The public will pay in terms of taxes,” he added.
The Maharlika Fund, he added, is being put up at the worst possible time, when the country’s debt servicing for 2023 is projected at P1.6 trillion or 29.8 percent of the Philippine debt.
The Maharlika Fund, he added, is being put up at the worst possible time, when the country’s debt servicing for 2023 is projected at P1.6 trillion or 29.8 percent of the Philippine debt.
Meanwhile, the projected deficit for 2023 is pegged at P1.47 trillion, which he said, will be funded from additional borrowings.
Meanwhile, the projected deficit for 2023 is pegged at P1.47 trillion, which he said, will be funded from additional borrowings.
“It will be more prudent if we first reduce our debt-to-GDP ratio from the present 64 percent to the pre-pandemic level of 40 percent before we even think of putting up the MIF,” he said.
“It will be more prudent if we first reduce our debt-to-GDP ratio from the present 64 percent to the pre-pandemic level of 40 percent before we even think of putting up the MIF,” he said.
“In any event, the MIF must always come from surplus revenues of the national government so that the cost of the equity of the fund to the Filipino people will be zero,” he added.
“In any event, the MIF must always come from surplus revenues of the national government so that the cost of the equity of the fund to the Filipino people will be zero,” he added.
Maharlika a 'direct assault' on BSP’s independence, autonomy
Former Bangko Sentral ng Pilipinas (BSP) deputy governor Diwa Guinigundo echoed Carpio’s warning, saying that if the Maharlika fund fails, it "could send tremendous shockwaves to the entire banking system."
Former Bangko Sentral ng Pilipinas (BSP) deputy governor Diwa Guinigundo echoed Carpio’s warning, saying that if the Maharlika fund fails, it "could send tremendous shockwaves to the entire banking system."
He explained that requiring Land Bank and the Development Bank of the Philippines (DBP) to provide P75 billion in seed money for the Maharlika Investment Fund will place them in a problematic position.
He explained that requiring Land Bank and the Development Bank of the Philippines (DBP) to provide P75 billion in seed money for the Maharlika Investment Fund will place them in a problematic position.
"Maaaring tumagilid, bumagsak, malagay sa peligro kapwa ang Land Bank at DBP dahil kinakaltasan sila ng P75-billion. Kung magkaganon, the bill mandates the BSP to help them out. In short, bail them out with public money,” he said.
"Maaaring tumagilid, bumagsak, malagay sa peligro kapwa ang Land Bank at DBP dahil kinakaltasan sila ng P75-billion. Kung magkaganon, the bill mandates the BSP to help them out. In short, bail them out with public money,” he said.
He noted that the government has deposits in Land Bank and the DBP, which could be affected.
He noted that the government has deposits in Land Bank and the DBP, which could be affected.
But the BSP itself, which is required to contribute 50 percent of its declared dividends for the first 2 years, might also be affected.
But the BSP itself, which is required to contribute 50 percent of its declared dividends for the first 2 years, might also be affected.
The BSP only has P50 billion capital which, he said, is too small to cover trillions of pesos of deposits.
The BSP only has P50 billion capital which, he said, is too small to cover trillions of pesos of deposits.
It has yet to meet its P200-billion required capitalization under the BSP Charter.
It has yet to meet its P200-billion required capitalization under the BSP Charter.
“This is a direct assault on the independence and autonomy of the Bangko Sentral,” he said, explaining that the proposed investment could even violate the BSP Charter, which mandates that the BSP shall not acquire shares of any kind or take part in the management of any enterprise.
“This is a direct assault on the independence and autonomy of the Bangko Sentral,” he said, explaining that the proposed investment could even violate the BSP Charter, which mandates that the BSP shall not acquire shares of any kind or take part in the management of any enterprise.
Guinigundo suggested that the government focus its spending on education, health and right wage instead because these derive value beyond the 7-8 percent expected returns from the Maharlika Fund.
Guinigundo suggested that the government focus its spending on education, health and right wage instead because these derive value beyond the 7-8 percent expected returns from the Maharlika Fund.
The government, he added, should also prioritize paying the country’s debts, reducing the debt-to-GDP ratio to 39.7 percent before the pandemic and addressing inflation.
The government, he added, should also prioritize paying the country’s debts, reducing the debt-to-GDP ratio to 39.7 percent before the pandemic and addressing inflation.
"We have a proposal, that does not seem to respond to the needs of our people in our times but instead weakens already established institutions. It is neither necessary nor desirable. Talo po tayo dito,” he said.
"We have a proposal, that does not seem to respond to the needs of our people in our times but instead weakens already established institutions. It is neither necessary nor desirable. Talo po tayo dito,” he said.
Guinigundo pointed out other countries which have sovereign wealth funds have excess income and these are derived from resource-based surplus funds such as diamond minding in Botswana and petroleum in Norway.
Guinigundo pointed out other countries which have sovereign wealth funds have excess income and these are derived from resource-based surplus funds such as diamond minding in Botswana and petroleum in Norway.
He said the Philippines cannot be compared to Singapore which has its own wealth fund because Singapore has surplus funds and has a high credit rating which means it could avail itself of lower interest rates when it borrows funds.
He said the Philippines cannot be compared to Singapore which has its own wealth fund because Singapore has surplus funds and has a high credit rating which means it could avail itself of lower interest rates when it borrows funds.
Former Commission on Audit Commissioner Heidi Mendoza meanwhile stressed the importance of the role of Land Bank and the DBP.
Former Commission on Audit Commissioner Heidi Mendoza meanwhile stressed the importance of the role of Land Bank and the DBP.
"Yung pera ng Land Bank, pera ng pasahod sa teacher, pera ng pambigay sa 4Ps at may dagdag ako, yung retirement via Land Bank din kaya huwag tayong ano na wala na yung SSS, GSIS, ang retirement via Landbank din po yan,” she said.
"Yung pera ng Land Bank, pera ng pasahod sa teacher, pera ng pambigay sa 4Ps at may dagdag ako, yung retirement via Land Bank din kaya huwag tayong ano na wala na yung SSS, GSIS, ang retirement via Landbank din po yan,” she said.
"Para bang makikipag-agawan pa itong Maharlika sa pagpapautang ng DBP for development, pagpapautang ng Landbank para sa farming at land banking,” she added.
"Para bang makikipag-agawan pa itong Maharlika sa pagpapautang ng DBP for development, pagpapautang ng Landbank para sa farming at land banking,” she added.
Meanwhile, lawyer and 1Sambayan convenor Howard Calleja warned that despite removing the requirement for SSS and GSIS to contribute to the Maharlika Fund, pensioners should still be wary because they can still invest in the fund.
Meanwhile, lawyer and 1Sambayan convenor Howard Calleja warned that despite removing the requirement for SSS and GSIS to contribute to the Maharlika Fund, pensioners should still be wary because they can still invest in the fund.
He suggested that lawmakers instead invest their pork barrel funds in the Maharlika fund and reduce corruption to just 5 percent from the current 10 to 20 percent corruption index.
He suggested that lawmakers instead invest their pork barrel funds in the Maharlika fund and reduce corruption to just 5 percent from the current 10 to 20 percent corruption index.
“270 congressmen. Meron kayong pork barrel na P100 million mahigit. Ibigay niya na po ang 100 million niyo. 27 billion na po yun. Yun na po yun ang iinvest ninyo…Meron po tayong 24 na senador. Meron po silang isang bilyon or more. Bigyan na lang natin ng 200 million ang kanilang pork barrel. That is [4.8] billion na po,” he said.
“270 congressmen. Meron kayong pork barrel na P100 million mahigit. Ibigay niya na po ang 100 million niyo. 27 billion na po yun. Yun na po yun ang iinvest ninyo…Meron po tayong 24 na senador. Meron po silang isang bilyon or more. Bigyan na lang natin ng 200 million ang kanilang pork barrel. That is [4.8] billion na po,” he said.
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Read More:
Maharlika Investment Fund
MIF
sovereign wealth fund
investment
debt
revenues
economy
debt-to-GDP ratio
BSP
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