Diokno: MIF won’t erode BSP’s financial stability

By Benjamin E. Diokno

Finance Secretary Benjamin E. Diokno assured that the contribution of the Bangko Sentral ng Pilipinas (BSP) to the Maharlika Investment Fund (MIF) would not erode the financial stability of the central bank.

As groups remained skeptical about the BSP’s participation in MIF’s funding, Diokno on Friday, June 2, explained that the central bank has a strong track record of maintaining financial stability.

In particular, Diokno cited that the central bank had extended an interest-free loan amounting to P540 billion at the height of the Covid-19 pandemic to the national government.

“That’s how good, BSP’s finances are,” Diokno, a former central bank governor, told reporters in a mobile phone message.

Under ratified version of the MIF Act of 2023, the BSP is required to contribute 100 percent of its dividends during the first two years of the fund’s establishment, or up to P50 billion.

“The contributions being asked from BSP for the first two years of the MIF, for a maximum of P50 billion, are dividends declared in favor of the national government,” Diokno pointed out.

“That’s the net profit of BSP and the NG [national government] decides how to use it,” he added.

However, MIF critics claimed that this mandatory contribution has effectively deprived the BSP of its required capital mandated under “The New Central Bank Act”, or Republic Act No. 7653.

As part of its new mandate, the BSP has increased its capital from P50 billion to P200 billion, with the additional funds derived solely from the declared dividends to the national government.

Last May 28, BSP Governor Felipe Medalla said he has no issue with the ratified sovereign wealth fund bill.

“The bill, as it is now, is okay. This is the product of long periods of discussions on the bill, Medalla said.

Earlier, Diokno lauded Congress for the swift approval of the MIF Act of 2023 after the House of Representatives adopted the Senate version of the bill.

“I thank our legislators for their thoughtful deliberation and timely approval of the Maharlika Investment Fund bill,” Diokno said.

“The economic team is resolute in its commitment to ensure that the entity created will be able to generate returns that will redound to inclusive and sustainable economic growth,” he added.

Diokno said the MIF, the country’s first-ever sovereign wealth fund, will optimize national funds by generating returns to support the Marcos administration’s economic goals.

He said the fund will be invested in a wide range of assets, including foreign currencies, fixed-income instruments, domestic and foreign corporate bonds, joint ventures, mergers and acquisitions, real estate, and high-impact infrastructure projects.