Release state banks’ share in MIF gradually–analyst
As the Marcos administration drums up support for the Maharlika Investment Fund (MIF) in Saudi Arabia, analysts said there were some changes that the government could apply to make the fund work, including a phased contribution by state-run banks to avoid straining their balance sheets. Calixto Chikiamco, president of the Foundation for Economic Freedom, said that while the creation of a sovereign wealth fund was “hard to justify” at the moment due to a lack of surplus resources, a gradual injection of capital by Land Bank of the Philippines (Landbank) and Development Bank of the Philippines (DBP) would make more sense rather than a one-time transfer. Chikiamco said the government can add this to the MIF’s implementing rules and regulations (IRR), which has been suspended pending “further study” by economic officials. “After all, the MIF doesn’t have a business plan in place. Therefore, the initial capital contribution will just stay idle for many months,” he said. “A phased capital contribution will allow Landbank and DBP not to breach their respective capital requirements,” he said. “It will allow the banks to build their capital and to continue to lend to farmers and for development projects without need for regulatory relief.” Chikiamco also said a “better way” to reimagine the MIF was not as a sovereign wealth fund but as a development fund, particularly for infrastructure and green projects with equity contribution from multilaterals “to assure good governance and sound investment.” He was referring to international lenders like the World Bank and the Asian Development Bank. Landbank and DBP earlier sought regulatory relief as their contributions to the MIF might make them noncompliant with the capital requirements set by the Bangko Sentral ng Pilipinas (BSP). Landbank last month remitted to the Bureau of Treasury its P50-billion contribution to the MIF while DBP turned in P25 billion. On Thursday, Fitch Ratings warned that the credit strength of Landbank and DBP may weaken following their investments to the MIF if the government does not put mitigating measures in place. Leonardo Lanzona, an economist at Ateneo de Manila University, said the government should add more safeguards to the IRR to keep the MIF free from political influence. “While the funds are public in nature, the government’s role should only be limited to providing a clear roadmap for the operations of the MIF and ensuring that it aligns with the government’s intentions and the interests of
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