The Bureau of Treasury (BTr) announced recently that it is supporting calls to study the passage of House Bill No. 6398 or the Maharlika Wealth Fund (MWF) which calls for the establishment of a P275-billion fund for the purpose of investing in big-ticket national development projects and other assets.
Based on the proposal, funding will be derived from government pension funds such as SSS and GSIS, the BSP, Philippine Amusement & Gaming Corp. (PAGCOR), as well as government financial institutions (GFIs), among other sources.
According to National Treasurer Rosalia de Leon of BTr, they are supporting the bill to ensure the integrity of the fund and to make certain that risk management procedures are put in place. “Upon reading the bill, we note that there are already eight measures that will safeguard the integrity of the fund,” de Leon said in a press statement. “We also support the calls to study the bill to ensure that risk management is in place.”
The move comes right on the heels of a series of inquiries raised by other lawmakers regarding the bill due to issues on funding, fiscal leeway, the independence of the Bangko Sentral ng Pilipinas (BSP), and transparency, among others.
Earlier, Finance Secretary Benjamin Diokno had also expressed support for the bill, noting that funding could easily be derived from the BSP’s Gross International Reserves (GIR) which are currently good for 7.5 months worth of imports.
Safety measures to be put in place
In support of their decision to support the bill, de Leon cited 8 safety measures included in the proposal that she said can be used to help better protect public funds. They are as follows:
- The MWF will strictly adhere to the Santiago Principles.
- All financial transactions shall be governed by all applicable government laws, rules, and regulations.
- There will be an internal audit (financial reporting and audit of records), wherein financial statements and reports shall be prepared in accordance with pertinent provisions of the Act and its IRRs, as well as international financial reporting standards and principles. The Board will also appoint an internal auditor who’ll provide written interim financial and management reports as requested by the body.
- There will be an internationally recognized auditing firm that will be the external auditor of the fund to audit its financial statements.
- The fund will be under the scrutiny of the Commission on Audit (CoA), and its books and accounts will be subject to the examination and audit of the CoA pursuant to the 1987 Philippine Constitution.
- There is an Advisory Body that will assist the Board of Directors in the formulation of general policies related to investment and risk management. The board will be consulted in case of transactions that affect the balance of payments, especially those which impact domestic liquidity and reserve money.
- There will be a Joint Congressional Oversight Committee (JCOC), composed of five members each from the House and the Senate, who will oversee, monitor, and evaluate the implementation of the Maharlika Wealth Fund Act.
- There is a specific provision that prevents unnecessary withdrawals from the fund. Section 15 of HB No. 6398 states, “No withdrawals of equity shall be made before 2028, and that, thereafter, equity withdrawals will be made in accordance with guidelines prescribed by the board or the Act’s IRR.”
According to de Leon, strict adherence to the Santiago Principles will help promote transparency, good governance, accountability, and prudent investment practices. She also cited the importance of a specific provision in the bill that prohibits unnecessary withdrawals from the fund before, and beyond, 2028.
The formation of an Advisory Body that will monitor and evaluate the wealth fund’s implementation and the provision of internal audits from both the Commission on Audit (COA) and internationally-recognized auditing firms could also help a great deal.
“We agree that we need to ensure that all these safeguards are in place for the protection of the funds of the people. However, with the proper safety measures, I believe that we should be able to proceed with the Maharlika Wealth Fund as this will ultimately benefit our people,” de Leon concluded.
Funds from SSS, GSIS, to be removed from the MWF
In a related development, the bill’s author, House Speaker Martin Romualdez together with other leaders of the House of Representatives, announced early this week that they will be removing the Social Security System (SSS) and Government Service Insurance System (GSIS) from the list of contributors to the fund.
The lawmakers said they’ve made the decision to cut out P175 billion in proposed contributions from the state welfare funds after meeting with the administration’s economic managers, who drafted the measure.
These changes will be introduced into the bill by the committee on appropriations in a meeting on Friday.
Without the proposed P125-billion allocation from GSIS and the P50 billion from SSS, the MWF will now get a P50-billion contribution from the Land Bank of the Philippines (LANDBANK), P25 billion from the Development Bank of the Philippines (DBP), and P25 billion from the National Treasury.