The Philippines just passed a bill to create a sovereign wealth fund. Here’s why it’s controversial
Lamchek says pension funds would be among the “absolute worst choices” to endow MIF, but bonds aren’t much better, he believes, arguing that investing with cash the government cannot afford to lose negates the idea of a sovereign wealth fund. “That’s really liabilities—not wealth,” he tells TIME.
Emerson Sanchez, a research fellow at the Institute for Infrastructure in Society at the Australian National University Crawford School of Public Policy in Canberra, says the Maharlika fund’s current financing strategy is “piling on risk after risk.” The Philippines is still facing macroeconomic headwinds post-pandemic: despite robust growth, the country has $243 billion in foreign debt and inflation at a“There are several safeguards embodied in the MIF to ensure its transparency and accountability,” the chair of the House Committee on Banks and Financial Intermediaries Irwin Tieng.
Bangko Sentral ng Pilipinas, the central bank of the Philippines, had initially expressed concerns about transparency in governing the MIF, but it now backs the fund’s creation. The central bank’s governor Felipe Medalla said his concerns have been “completely addressed,” according to , adding that he doesn’t think the fund as currently proposed will negatively affect the bank’s ability to maintain price stability in the country.Finance experts have long raised concerns over sovereign wealth funds for their potential for corruption and mismanagement. Malaysia’s Najib was sentenced to 12 years in prison on charges of criminal breach of trust, abuse of power, and money laundering related to 1MDB. An estimated $4.
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