DOF assures PHP107-B PDIC remittance won’t impact deposit reserves

The Department of Finance (DOF) has clarified that the PHP107-billion remittance from the Philippine Deposit Insurance Corporation (PDIC) to the national government involves unrestricted funds and will not affect the agency’s reserve for deposit insurance.

“These funds are unrestricted, meaning they can be allocated for other purposes. They comprise cash and investment balances, net of restricted amounts,” the DOF stated Thursday.

The PDIC’s Deposit Insurance Fund (DIF), which serves as a safeguard for insured deposits and provides financial assistance to banks in emergencies, remains fully intact at PHP250 billion. This reserve represents 5.5 percent of the nation’s insured deposits, within the PDIC Board's target range of 5 to 8 percent.

Finance Secretary Ralph Recto assured the public that the DIF is well above international standards, affirming its adequacy to cover banking risks and insurance claims.

As of November 2024, PDIC paid PHP282.31 million for deposit insurance liabilities while provisioning PHP3 billion monthly to sustain and grow the DIF ratio.

The PHP107 billion remittance, according to the DOF, has been allocated to vital government programs, including infrastructure rehabilitation, social welfare initiatives like the Food Stamp Program, rural electrification, and disaster-related projects. Additionally, it supports major foreign-assisted endeavors, such as the Metro Manila Subway Project, North-South Commuter Railway, and Mindanao Inclusive Agriculture Development Project.

Recto emphasized the importance of leveraging dividends from government-owned and controlled corporations (GOCCs) to fund national programs rather than increasing taxes or borrowing. "I'd rather get more dividends from performing GOCCs than raise taxes or take on additional borrowings," he said.

The DOF underscored that PDIC remains capable of delivering its mandate and addressing insurance claims effectively, ensuring continued public confidence in the banking sector.