Overseas Filipino Workers (OFWs) who can spare an investment of around $200 could do so through the government’s dollar denominated bonds set to be launched next year, according to the Department of Finance (DOF).
In the Kapihan sa Manila Bay, Finance Secretary Benjamin E. Diokno said the government is eyeing to float around $1 billion to $3 billion worth of these bonds in the first quarter of 2023.
While the terms for the float are still being determined, it is possible that these bonds would have a tenor of a minimum of 5 years which makes investments in these bonds tax-free.
“If you have a young kid whom you must send to school in five years, you can invest your money there. [This is a better investment than] using their earnings for tricycles or something similar,” Diokno said in the forum.
The amount of the investment, Diokno said, represents around 10 percent of the $30 billion worth of dollar inflows that the country receives from abroad.
In terms of whether the tenor will be a single one or several, Diokno said the Bureau of the Treasury (BTr) will determine that.
Meanwhile, Diokno said he is confident that the government will be able to exceed its revenue targets.
He noted that the Bureau of Customs (BOC) has already met its annual target for the year by collecting P745.5 billion as of November 11.
The BOC said its target for the year is P721.52 billion. Its revenue collection as of November 11 was up by P23.98 billion or 3.27 percent.
The DOF attached agency said all 17 collection districts of the Bureau also reached their respective collection targets, garnering a surplus of 16.8 percent or P103.29 billion as of October 31.
Diokno, however, said the Bureau of Internal Revenue (BIR) remained 3 percent behind its collection target. But this was also an improvement since, the DOF Secretary said, the new administration assumed office with BIR behind by 6 percent in its targets.
Despite this, Diokno said he is confident that the surplus from the BOC collections would be sufficient to cover the country’s deficit.
Maharlika Fund
Diokno also spoke about the proposed Maharlika Fund which is envisioned to become the country’s sovereign wealth fund.
He said the sovereign wealth fund will be patterned after Singapore’s Temasek as well as Australia’s Future Fund. Diokno said the idea behind the sovereign wealth fund is to save for the future.
The fund will be set up with several government financial institutions as well as representatives from key agencies such as the DOF and the National Economic and Development Authority (Neda).
According to the Sovereign Wealth Fund Institute (SWFI), the sovereign wealth fund is a government owned investment fund or entity that is commonly established from balance of payments surpluses and official foreign currency operations. These funds can also be created using the proceeds of privatizations; governmental transfer payments; fiscal surpluses; and/or receipts resulting from resource exports.
The SWFI, however, said sovereign wealth funds exclude foreign currency reserve assets held by monetary authorities for the traditional balance of payments or monetary policy purposes.
It also does not include state-owned enterprises (SOEs) in the traditional sense; government-employee pension funds (funded by employee/employer contributions); and assets managed for the benefit of individuals.
On Tuesday, in the fund’s version that was approved by the House Committee on Banks and Financial Intermediaries, the Maharlika Wealth Fund will include P125 billion from the Government Service Insurance System (GSIS) and the Social Security System (SSS) has committed P50 billion.
The GSIS provides “social security/insurance and financial benefits to all government employees and their dependents” while the SSS extends social security protection to workers in the private sector.
The Land Bank of the Philippines (LBP) has also committed P50 billion for the Maharlika Fund while another GFI, the Development Bank of the Philippines (DBP) has committed P25 billion. (full story: www.businessmirror.com.ph/2022/11/30/4-gfis-agree-to-invest-%e2%82%a7250bin-maharlika-wealth-fund/)
Image credits: Joseph Vidal/Senate PRIB