Analyst says Philippines not ready to set up sovereign wealth funds

Foundation for Economic Freedom (FEF) president Calixto V. Chikiamco said the Philippines is not in a position to set up a sovereign wealth fund given the government’s tight fiscal position and large debt-to-gross-domestic-product (GDP) ratio. Furthermore, Chikiamco said the government doesn’t enjoy any fiscal bonanza from a commodity price boom, such as minerals or oil. A bill seeking to create a Maharlika Wealth Fund has been filed in Congress, which will make investments by utilizing funds proposed to come from the Government Service Insurance System (GSIS), the Social Security System (SSS), Land Bank of the Philippines (LANDBANK) and the Development Bank of the Philippines (DBP). The sovereign wealth fund will get an initial investment of PHP250bn (about USD5bn) from these state pension funds and banks. Chikiamco said it will be risky to use pension funds, which are typically managed conservatively, for a sovereign wealth fund.