Finance Secretary Benjamin Diokno briefed World Economic Forum (WEF) chief executive officers (CEOs) on the current state of the Philippine economy, as well as the proposed Maharlika Investment Fund.
At a breakfast interaction with President Ferdinand Marcos, Jr. and Philippine economic managers at the Hotel Belvedere in Switzerland, Diokno said the Philippines is launching its first-ever sovereign wealth fund dubbed as the Maharlika Investment Fund (MIF).
The proposed fund, Diokno explained, supports the government’s economic and social transformation strategies to reinvigorate job creation and accelerate poverty reduction through inclusive economic growth.
The MIF is a tool to diversify the country’s financial portfolio, which includes existing institutions pursuing investment activities. The Fund will specifically be used for investments with high returns, and for infrastructure development.
He added that this will be an important instrument to generate consistent and stable investment returns in order to build a more prosperous economy for the future generations.
The highest standards of accountability, sound financial management, and good governance will be observed following the creation of the MIF. Safeguarding measures will be strictly implemented to help protect the people’s fund.
The head of the Department of Finance (DOF) also detailed the Philippine economy’s strong macroeconomic fundamentals and well-crafted structural reforms that have enabled the country to withstand the effects of the COVID-19 pandemic.
“Our daring economic goals are supported by structural reforms that remove barriers to foreign investments, further open economic sectors to foreign equity, improve the ease of doing business, and allow for modern, transformative industries to take root and grow,” he said.
Diokno highlighted the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act; the amendments to the Retail Trade Liberalization Act (RTLA), Foreign Investments Act (FIA), Public Service Act (PSA); the liberalization of the renewable energy sector; and the implementing rules and regulations (IRR) of the Build-Operate-Transfer (BOT) law.
“These all form the scaffolding for rapid and sustained growth for the Philippines,” the DOF chief added.
For the first three quarters of 2022, average growth reached 7.7 percent, surpassing the full-year target of 6.5 to 7.5 percent. The Philippine economy outperformed Indonesia, Singapore, and China.
All major production sectors registered positive growth, suggesting broad-based expansion despite the increase in international and domestic commodity prices.
The Philippines’ strong economic recovery was also seen in the drop in unemployment rate, which decreased to 4.2 percent—the lowest since 2005 and lower than the pre-pandemic level of 4.5 percent.
On foreign direct investment (FDI), the Philippines raked in record-high net FDI inflows of $12.4 billion in 2021. For the first ten months of 2022, net FDI inflows have reached $7.6 billion.
Gross international reserves (GIR), on the other hand, remain at a healthy level of $96 billion at end December, which means that the country has enough to pay for 7.3 months’ worth of imports.
This is well above the International Monetary Fund (IMF)’s reserve adequacy metric and higher than selected Asian and emerging economies.
From January to November last year, revenue collections have already reached P3.28 trillion, which is 18.1 percent higher than the collection for the same period in 2021. The country is now at 99.2 percent of its full-year target for 2022.
“All these signs indicate that we have adequate buffers against external headwinds and that our economy is resilient, agile, and primed for new heights,” Diokno said.
