'Is Maharlika worth it?' Investment banker weighs in


Posted at Jun 08 2023 02:10 PM

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Using the Bangko Sentral ng Pilipinas’ dividends to fund the Maharlika Investment Fundm (MIF) may be detrimental if the fund goes sideways, Global Investment Banker Stephen Cuunjieng said on Thursday.

The Bangko Sentral ng Pilipinas needs funds to perform its mandate and to act timely in cases of global, regional or local crises such as during the Asian financial crisis, the Russia and Ukraine war as well as the COVID-19 pandemic.

“A lot of these are not anticipated but you have to have the weaponry to deal with it, if it's a small crisis fine you might have enough money to do it, but if its full fledged crisis, you never have enough money, you hope the shortfall is not catastrophic,” he told ANC. 

“You're basically dedicating the BSP's profits for the next few years to Maharlika, which has no clear use of proceeds yet rather than letting the BSP continue to build up its balance sheet,” he added.

Under the MIF, the Bangko Sentral ng Pilipinas will give 100 percent of its dividends to the fund for the first two years of operations.

Sourcing seed money from the Landbank of the Philippines as well as the Development Bank of the Philippines also has an impact on the banks’ lending capability, he said.

“When you look at risk-reward, is it worth it? I'm not saying Maharlika is bad... But when you look at what it's depriving, when you add the pluses and the detriments...The risks can be very bad, the upside it can be very good," he said.

Faculty members of the UPSE on Tuesday published a paper titled ‘Maharlika Investment Fund: Still Beyond Repair’ which called on President Ferdinand Marcos Jr. to reconsider signing the bill.

Finance Secretary Benjamin Diokno defended the measure by saying several layers of safeguards were placed within the bill by lawmakers. 

He said the MIF is currently being finalized and would be transmitted to the president in about 2 weeks.

But proponents of the measure have said the fund has enough safeguards and that it would be managed by credible individuals.