The Bangko Sentral ng Pilipinas (BSP) has assured congressmen that using the central bank's dividends on the proposed Maharlika Wealth Fund (MWF) would not have any adverse effects on its gross international reserves (GIR).

(Giorgio Trovato/ Unsplash)

BSP Deputy Governor Francisco Dakila Jr., made this guarantee Friday, Dec. 9 to member of the House Committee on Appropriations during a public hearing.

Taken up during the hearing was the funding provision of the unnumbered bill on the MWF, which basically is an investment-centric sovereign wealth fund. House Bill (HB) No.6398 or the proposed MWF Act is the precursor of the unnumbered bill.

The funding provision of the bill was revised so that the MWF would mainly draw its seed money from the BSP, Land Bank of the Philippines (LBP), and Development Bank of the Philippines (DBP). Dropped as fund sources were the Government Service Insurance System (GSIS) and Social Security System (SSS), which handle Filipino workers' pension funds.

Under the BSP's proposal, which House panel later accepted, the central bank will funnel 100 percent of its declared dividends to the MWF for its first year, based on amount of dividends in the year prior to the sovereign wealth fund's enactment.

Dakila said tapping the dividends for the MWF won't affect the GIR. However, minority member ACT-Teachers Party-list Rep. France Castro wasn't convinced.

"Hindi po ako sang ayon sa sinasabi ninyo (I don't agree with what you're saying)," Castro said, prompting Dakila to explain.

"Ang assumption po doon, yun contribution kasi ay manggagaling sa dividends na nireremit ng BSP. And yung dividends na yun, ang denomination is Philippine pesos. So kaya po walang impact sa ating GIR (The assumption is, the contribution will come from the dividends remitted by the BSP. And those dividends are in Philippine peso denominations. So that's why it won't have any impact on our GIR)," Dakila said.

BSP Deputy Governor Francisco Dakila Jr. (Screenshot from Zoom meeting)

"Ang GIR ay nasa foreign currency so hindi ho matatamaan ang ating holdings ng foreign exchange reserves (The GIR is in foreign currency, that's why our holdings on foreign exchange reserves won't be affected)," the BSP official further explained.

Lawyer Leila Rivera of BSP said during the hearing that their dividends are declared “in the amount of 50 percent of out our income”. She further said that for 2022, the BSP's projected figure is “P60 to 70 billion”.

“So our dividends that can be declared will be about P30 to 35 billion,” Rivera told the panel.

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