MWF long overdue
The debt to GDP ratio is about 6:10, which is fairly manageable based on the current standards compared to other countries which have a 200 percent to 300 percent ratio.
Text size
Share
Daily TribuneThe debt to GDP ratio is about 6:10, which is fairly manageable based on the current standards compared to other countries which have a 200 percent to 300 percent ratio.
Share
It is not a question of the capability of the country to invest in the MWF but a question of when should we realize the necessity of it.
Thus, Finance Secretary Benjamin Diokno issued a challenge to the critics in the raging debate over the Maharlika Wealth Fund.
The creation of a sovereign fund should have been done years before, for the country to reinvest income from several sources of funds such as mining and other exhaustible resources, according to the former central bank governor who is also an economics professor at the University of the Philippines.
As a country we are not saving for the future, he said.
The MWF bill has been hit by a barrage of misinformation that resulted in huge adjustments that consequently reduced the strength of the measure which may end up dead in the water despite the determined push of the House of Representatives.
Senators have made it plain that the MWF bill has a slim chance of even seeing light at the Senate.
Contrary to what is being peddled by detractors, Diokno said it is the perfect time to pool financial resources for investments.
"The market is bad but if you're a serious investor then it is the time to invest. When activity picks up you have a high return, so there is no perfect timing for MWF," Diokno said.
The new version appears "fairly acceptable" since the initial proposal to have the Government Service Insurance System and the Social Security System was removed, the Department of Finance chief said.
Another misconception being spread is that MWF will be a parallel money for the government which Diokno said it is not.
"MWF is long term and it will be run by professionals and there will be no need for Congress for appropriation."
He stressed the country is rich but it has not been maximizing income from its resources.
Diokno cited as an example the Malampaya Fund that he said the royalties from natural gas sales should have been used instead for a welfare fund.
There are other natural wealth that the government is not fully utilizing such as the radio frequency bandwidth which Diokno said is auctioned off in other countries.
"Why does the government just give it away to the telcos?" Diokno asked.
Another possible source is the reclamation projects which should also be bid out, he continued.
Proceeds from the auctions of these assets can fund MWF.
Diokno also wanted to put to rest MWF detractors' highlighting the level of the country's debts in their opposition.
"The way to look at public debt is in relation to the size of the economy. It is similar to a household's income if a family earns P20,000 and you borrow P3,000, it is manageable but if you're not earning anything and you have a lot of debts then you're in trouble," Diokno said.
The debt to GDP ratio is about 6:10, which is fairly manageable based on the current standards compared to other countries which have a 200 percent to 300 percent ratio.
The 60 percent ratio was standard decades ago. For instance, it was used as a requirement for joining the European Union but Diokno explained after the series of crises including the pandemic, the number had adjusted.
"Besides, many of our loans are long-term, we even have borrowings with 40-year terms," Diokno said.
Now the International Monetary Fund accepts as reasonable a 70 percent debt level in comparison to the economic output.
When asked if the MWF will have enough money for pooling, Diokno merely said "Oh yes!"
There is enough misinformation being spread to keep Diokno and the economic managers busy in saving a good idea from being wasted. Most brickbats do not have a basis but are mere partisan noises.
