Philippine President Ferdinand Marcos on Tuesday signed into law a bill creating a $9 billion sovereign wealth fund to boost economic growth and infrastructure spending, but critics warn against misusing the fund.
Mr. Marcos had been lobbying Congress to quickly pass the bill, introduced by his son and cousin late last year. During the signing ceremony at the presidential palace, Marcos said the fund would “mobilize a small portion” of government money without increasing the country’s debt burden.
“We will use a small fraction of the government’s considerable but underutilized investment funds to stimulate the economy without increasing the tax and debt burden,” Marcos said, less than a week before his second state of the nation address.
A “hoax” for some detractors
However, a small group of protesters gathered near the palace to oppose the law, saying the fund was a “hoax” and would put public money “at risk”.
The 500 billion-peso “Maharlika Investment Fund” will get most of its resources from the national government, including the central bank, gaming revenue and two state banks. Banks and private companies will also be able to invest.
The initial proposal called for a $4.9 billion fund, financed in part by state pensions for government and private sector workers, raising public fears that retirement savings could be jeopardized.
Reduce dependence on external borrowing
The final version of the bill approved by congress in May stipulates that pension funds will not have to contribute. The fund will be authorized to make a wide range of investments, including in corporate bonds, stocks, joint ventures and infrastructure projects.
Marcos said Tuesday the fund would help the government meet its economic growth targets and reduce reliance on foreign loans to pay for new roads and bridges.
The Philippine president insisted that the fund would be transparent and only the best financial professionals would be hired to manage it. “The resources entrusted to the fund will be managed with the utmost care and integrity,” Marcos said.
Traditional sovereign wealth funds are financed by windfall profits the government makes from natural resources like oil or minerals.
Source: BFM TV
