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FACT CHECK: No mention of ending foreign loans in Marcos’ Maharlika speech


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FACT CHECK: No mention of ending foreign loans in Marcos’ Maharlika speech
While the President said the fund will stimulate the economy without additional debt burden, he did not categorically say the country will no longer need foreign loans

Claim: President Ferdinand Marcos Jr. said that with the signing of the law creating the Maharlika Investment Fund (MIF), the Philippines would no longer need foreign loans.

Rating: FALSE

Why we fact-checked this: The YouTube video posted on July 18 has garnered 185,052 views and 5,000 likes from a channel with 338,000 subscribers.

The video’s narrator says: “Ayon sa Pangulo, hindi na tayo kailangang umutang sa China dahil ngayong araw ay kanya nang pipirmahan ang sariling sovereign fund sa Maharlika.

(According to the President, we do not need to borrow from China anymore because, on this day, he will sign our very own sovereign fund, Maharlika.)

The bottom line: The video shows RTVM footage of Marcos’ speech during the signing of the law creating the sovereign wealth fund on July 18. Contrary to the claim, Marcos did not say that the Philippines would no longer need to borrow money from other countries, particularly from China.

No categorical statement: In the video, and as seen in the transcript of his speech, Marcos said that the MIF is designed to “stimulate the economy without the disadvantage of adding additional fiscal and debt burden” as the government makes investments in agriculture, infrastructure, digitalization, and other projects.

While Marcos said the fund will enable the government to invest in projects without “taking on additional borrowings,” he did not categorically say the Philippines will stop taking out foreign loans. 

The finance department said the MIF is “expected to widen fiscal space, ease the burden on local funds, and reduce reliance on official development assistance in funding big-ticket projects,” according to a Philippine News Agency report. National Treasurer Rosalia de Leon has also said that the MIF will ease pressure on the government to secure more loans.

Sovereign wealth fund: Article II, Section 13 of Republic Act 11954 states that the objective of the MIF is to “promote socioeconomic development” by “making strategic and profitable investments.” It will be used by the government to invest in domestic and foreign corporate bonds, commercial real estate, and infrastructure projects, among others. 

The law does not present the MIF as a means for the country to stop incurring future debts. Article II, Section 10 states that the Maharlika Investment Corporation (MIC), which has the power to determine which assets and projects to invest in, can issue debt instruments. However, any bonds issued by the MIC will not be backed by the Philippine government. 

The controversial measure was signed amid criticism of its political and economic risks, such as the possibility of adding to the country’s huge debt burden.

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Other countries with sovereign wealth funds, like Saudi Arabia, continue to borrow money. In 2023, for instance, the kingdom was estimated to borrow around $12 billion, Arab News reported.  

Loans from China: The Philippines is currently seeking $900 million worth of loans from China’s Asian Infrastructure Investment Bank to fund a post-pandemic recovery program and the Manila Metro Rail Transit Line 4 project, Business World reported

As of January 2023, China has a $1.06-billion loan commitment to the Philippines for its ongoing projects, according to Inquirer.net.

Rappler has published several fact-checks before on the controversial Maharlika Investment Fund:

– Kyle Marcelino/Rappler.com

Kyle Marcelino is a graduate of Rappler’s fact-checking mentorship program. This fact check was reviewed by a member of Rappler’s research team and a senior editor. Learn more about Rappler’s fact-checking mentorship program here.

Keep us aware of suspicious Facebook pages, groups, accounts, websites, articles, or photos in your network by contacting us at factcheck@rappler.com. Let us battle disinformation one Fact Check at a time.

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