EDITORIAL - Minute scrutiny

Now that President Marcos has touted the country’s sovereign wealth fund to the World Economic Forum as part of Philippine post-pandemic recovery efforts, the Senate should do its job and subject the proposal to minute scrutiny.

Giving the President something to present at the annual WEF gathering in Davos, Switzerland must have prompted the super majority in the House of Representatives to railroad the measure within a record 17 days, from filing of the Maharlika bill to formal approval on third reading. Since the passage of House Bill 6608, the proposal has also undergone a name change, from the Maharlika Investment Fund to the current Maharlika Wealth Fund.

As investment bankers and economic analysts have pointed out, many key issues remain unclear in the proposed financial scheme. Amid a public uproar, the House super majority had dropped like a hot potato the original intent to tap pension funds in the Social Security System and Government Service Insurance System for Maharlika. But Finance Secretary Benjamin Diokno has said the SSS and GSIS boards can still decide to participate in the fund.

The Bangko Sentral ng Pilipinas is also strongly opposing proposals to tap the country’s gross international reserves for the fund. But it turns out that part of the reserves will still be used for the fund, which the administration reportedly wants to utilize for infrastructure projects and development programs.

Private sector participation in the fund remains unclear, including how much say it will have in decision making. Opponents have also noted the stiff cost of maintaining the Maharlika management team and the enormous salaries for those who will be selected to run the fund.

Last year, several of the world’s largest and most efficiently managed sovereign wealth funds lost massive amounts in global investments. For 2023, most economic analysts have warned of worse times ahead and a possible global recession. The Philippine government has said Maharlika will not place investments outside the country, but it looks like this is also not yet final. The only thing that has remained unchanged in the proposal is the use of “Maharlika” – a word that seems to have a special place in the heart of the current national leadership.

There has been no counterpart Senate measure filed so far. With the country buried in a record high P13.64 trillion debt as of end-November 2022, and with inflation at a 14-year high, the government cannot afford any profligacy. Senators must give the Maharlika proposal the careful scrutiny that it did not receive from the House super majority.