Crippling

Harsh as it may sound, fiscal management the past two years seems to have put short-term political expediency ahead of long-term institutional stability. It is as if policy is intentionally designed to cripple whatever gives our national economy stability and vigor.

- Alex Magno

The trend began with the establishment of the Maharlika Fund. Packaged as a "sovereign wealth fund," this contraption drew its funding from P75 billion extracted from the two government banks.

The extracted money now compromises the capital adequacy ratio of the two otherwise well-run banks. More than that, the extraction disabled the banks from P750 billion in developmental lending. These two banks lend money to real businesses that fuel the real economy.

Instead of funding bank lending activities that generate wealth and create jobs, the P75 billion extracted from LBP and DBP have stood idle for two years now. Not one peso of the fund has been invested in anything resembling wealth generation.

For two years, even as it has not made a single investment, the Maharlika Fund incurs humongous overhead costs. The financial talent recruited to manage this now idle fund are paid their market rates. They are not wild-eyed volunteers contributing their talents for free in the name of patriotism.

The grapevine tells us Maharlika will finally make an investment soon. The fund will be buying into the National Grid Corporation, now firmly under the control of Chinese companies. This might produce a profitable investment eventually, especially if the grid is allowed to continue burdening our consumers with oversized charges. But it will not create a single new job in the domestic economy.