IMF advises recapitalizing LandBank, DBP for Maharlika Fund

The International Monetary Fund (IMF) has advised that two state-owned banks contributing to the Maharlika Investment Fund should be recapitalized as soon as possible to bolster the Philippines' financial system.

According to its 2024 Country Report, the IMF highlighted the need for capital restoration plans for the Land Bank of the Philippines and the Development Bank of the Philippines after they contributed P75 billion to the Maharlika Investment Corporation (MIC).

The report emphasized that while the MIC can address investment needs, it should not compromise a resilient financial system or regulatory framework.

To recall, LandBank remitted P50 billion and DBP P25 billion to the Bureau of the Treasury for the initial capital of the MIF in 2023, seeking regulatory relief from the Bangko Sentral ng Pilipinas (BSP).

Despite these concerns, President Ferdinand Marcos Jr. has continued to promote the fund to investors as a means to pool unused government funds for investments without increasing borrowing.

The IMF expects the Philippine economy to grow by 5.8 percent in 2024 and reach 6.1 percent in 2025, with inflation projected to decline to 3.2 percent on average this year from 6.0 percent last year.