Did he just step back from the sovereign fund abyss?
It seems so. By ordering last week his key Finance officials to step on the brakes on the careening Maharlika Investment Fund or MIF, President Ferdinand Marcos Jr. may have belatedly realized that his pet project entailed risks he couldn't ignore.
Still, details on exactly why Mr. Marcos Jr. suddenly decided the MIF needed further study remain sketchy.
Circulating rumors, though, have it that the suspension is merely a prelude to a momentous Cabinet revamp or that Marcos faced obstacles in naming a trusted ally to an MIF post.
Plausible, too, is the view that suspension is but another instance of how Marcos politically operates when dealing with contentious issues or personalities.
As one perceptive analyst saw in another controversial issue involving a political personality, this administration's political tactics seem to be a case of "they would take a step, wait and see (and measure) the public reaction, then take another step if warranted, or postpone or even backtrack if there was too much opposition."
When first proposed, the MIF undoubtedly did face stiff opposition, including stinging criticism from Filipino economic experts.
But the administration rebuffed those warnings and practically rammed, in record time, the MIF through Congress.
Enacted last 18 July, the Treasury department drafted 41 days later, on 28 August, the law's Implementing Rules and Regulations or IRR needed to get the MIF off the ground.
With hardly any opposition to the IRR, Finance Secretary Benjamin Diokno, who is to chair the newly created Maharlika Investment Corp. or MIC, announced the start of MIC's operations at year's end.
However, the MIF's core problem of initial funding came to pass.
Under the MIF law, the Landbank and the Development Bank of the Philippines or DBP are required to give up P50 billion and P25 billion, respectively, for the MIF's seed money.
Both state-run banks remitted the amounts to the Treasury last 14 September.
Subsequently, however, both banks sought "regulatory relief" from the Bangko Sentral ng Pilipinas' capital requirement for banks.
The central bank requires big banks like Landbank and DBP to have a capital adequacy ratio of 10 percent.
News reports indicated the DBP is teetering precipitously, trying to keep up with the BSP's 10 percent capital adequacy ratio.
To understand this restriction, one news website puts it this way: "Think of it as a careful balancing act between keeping enough money in the bank's vault and giving it out to the bank's clients through loans."
But with billions in capital suddenly gone, the "balancing act" of both state-run banks precariously tilted, forcing both banks to seek ways not only to build up their capital base but also to seek relief from the BSP's requirement.
Consequently, proactively seeking "regulatory relief" is but one measure against any ensuing banking problems like meeting depositor obligations or paying off debts arising from capital constraints.
Seeking "regulatory relief" then didn't come as a surprise.
In fact, early this year, UP economics professors strongly opposed to the MIF, even before its enactment, predicted that "draining capital from state banks like the LBP and the DBP risks destabilizing these institutions and compromises their ability to meet BSP's capitalization requirements."
UP economists have yet to issue a statement about their fears coming true.
At any rate, economists and private bankers said that giving away so much money raised concerns the state-run banks may not be, as yet, strong enough to continue providing loans to farmers and small businesses or give dividends to the administration in the ways they used to.
In that sense, both banks' sudden lack of capital could get in the way of countryside development.
It is in this context that we can begin to understand Executive Secretary Lucas Bersamin's prosaic statement that "he (Marcos) wanted to study carefully the implementing rules and regulations to ensure that the purpose of the fund will be realized for the country's development…"
