Determined to implement the planned sovereign wealth fund, Finance Secretary Benjamin E. Diokno said has identified other sources of financing that will take up the slack following the exit of Government Service Insurance System (GSIS) and Social Security System (SSS) as original funders of the Maharlika Wealth Fund.
GSIS and SSS were originally identified as founding investors in Maharlikha fund at least P125 billion and P50 billion, respectively. However, the two state-owned pension funds were dropped as financial backers amid mounting opposition.
While GSIS and SSS are out, Diokno said that Land Bank of the Philippines and Development Bank of the Philippines (DBP) remain as funding founders with an initial commitment of P50 billion each, or P100 billion combined.
In the case of the Bangko Sentral ng Pilipinas (BSP), Diokno said its foreign exchange would no longer be used for the Maharlika fund. Instead, they plan to funnel 100 percent of its declared dividends to the fund during the first two years.
On the succeeding fiscal years, he said the central bank shall remit half of its declared dividends to the fund and the remaining 50 percent will help complete the P250 billion capital requirement of the BSP.
Based on the DOF data, the BSP remitted P23.05 billion in dividends to state coffers in 2019, P17. 9 billion the following year, and P15.89 billion last year.
Once the P250 billion capital commitment to the for BSP has been completed, Diokno said the central bank will begin remitting 100 percent of its declared dividends to the Maharlika Fund.
Aside from the BSP, the finance chief said the Philippine Amusement and Gaming Corp. (Pagcor) and the national government will be mandated to contribute to the Maharlika Fund.
“Pagcor will also have a contribution at least at least 10 percent of gross gaming revenue streams created. The national government may also contribute and that will be authorized in the general Appropriations Act or any supplemental appropriations,” Diokno said.
Other sources include royalties on natural resources, such as mining, as well as proceeds from the privatization of state assets and public borrowings, the DOF chief said.
“That's the basically the sources of funding of the Fund, excluding now the social security contributions and GSIS,” Diokno said.
But there is a caveat as Diokno disclosed that GSIS and SSS may still opt to invest in the Maharlika Fund if their respective board of directors would allow it.
“We are not mandating them to contribute, but if they're looking for higher returns, because right now, most of their money are invested in treasury bills, and they don't earn that much, they may decide to contribute,” Diokno said.
“But that is up to the respective boards of GSIS and SSS,” he clarified.