The International Monetary Fund (IMF) has called for a swift capital restoration of the Land Bank of the Philippines and the Development Bank of the Philippines (DBP) following their contributions to the Maharlika Investment Fund (MIF), the country’s first sovereign wealth fund, in a country report released on December 19.
The IMF emphasized the need for the two state-owned banks to have their capital and exit regulatory relief measures replenished promptly.
“Implementing capital restoration plans for two state-owned banks following their contribution to the Maharlika Investment Corporation’s (MIC) start-up capital and exiting regulatory relief as soon as possible is important,” the report read.
“While the establishment of the MIC can help address the country’s investment needs, it should not come at the cost of a resilient financial system, sound regulatory framework, and level playing field,” it continued.
Landbank and DBP remitted P50 billion and P25 billion, respectively, to the Bureau of the Treasury (BTr) to fund the MIF’s start-up capital.
Both lenders sought regulatory relief from the Bangko Sentral ng Pilipinas (BSP) earlier in 2023, as their capital contributions to the MIF were perceived to lead to difficulties in meeting the minimum capitalization requirement.
In response to the IMF’s recommendations, Landbank reaffirmed its financial strength and stability despite its P50 billion contribution to the MIF in a statement released on December 27.
President Ferdinand “Bongbong” Marcos Jr. signed the MIF into law in July 2023 via Republic Act No. 11954, leveraging state resources for investment endeavors in a vow to generate additional public funds.
In November this year, senators criticized the MIC for failing to present concrete investment plans for the power sector, despite earlier identifying it as a priority.
Senate Minority Leader Aquilino “Koko” Pimentel III also expressed concerns over the MIC’s failure to establish employee hiring guidelines more than a year after the MIF law was enacted.
