Philippine economic officials push for sovereign wealth fund
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PHILIPPINE economic officials on Friday (Dec 9) urged the immediate passage of a sovereign wealth fund plan, which was revised to source contributions from the central bank’s dividends instead of pension funds.
Finance Secretary Benjamin Diokno said the revised proposal would require the Bangko Sentral ng Pilipinas (BSP) to contribute all of its annual dividends into the wealth fund for the first two years. For subsequent years, he said the central bank may put in just half of its dividends and use the other half to increase its capital.
The nation’s state-run pension funds would not be mandated to contribute to the fund, but may do so if their boards approve it, he added.
“The establishment of a sovereign wealth fund is a tried-and-tested investment vehicle,” the finance chief said, reading a statement which he said was signed by officials, including the central bank governor.
“Let us not delay economic progress.”
The statement signalled consensus among economic managers on the new wealth fund plan. This came after the initial proposal drew opposition from officials, including BSP governor Felipe Medalla. If the plan were pushed through, the Philippines would join other developing nations like India and Indonesia, which have turned to sovereign wealth funds to support their economies.
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The finance chief said the planned wealth fund could increase investment and funding of big-ticket infrastructure, as well as high-return “green” and “blue” projects, and countryside development. He added that it could also help boost the country’s fiscal space, and reduce fiscal pressure.
He also said the wealth fund could tap mining royalties and proceeds from bonds, including those targeting overseas Filipinos’ remittances.
“Any resources that are exhaustible – that’s a good source of funds.”
The proposed wealth fund would be run professionally and subject to accountability, Diokno said, noting that the board would be advised by the national treasurer and the National Economic and Development Authority.
He added that the central bank would also be given a board seat in the proposed sovereign wealth fund. BLOOMBERG
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