The fiscal discipline that the Department of Finance (DOF) continues to impose on government-owned or controlled corporations (GOCCs) has yielded P57.55 billion in actual dividend remittances in 2021 from these state-run firms or 9.4 percent higher than the 2019 pre-pandemic collection of P52.59 billion.
These 2021 remittances exclude the dividends foregone in 2020 income from the Land Bank of the Philippines (LANDBANK) and Development Bank of the Philippines (DBP), which retained their dividend contributions to continue boosting their capital requirements, the DOF’s Corporate Affairs Group (CAG) said in its report to Finance Secretary Carlos Dominguez III.
Inclusive of the dividend relief granted to select GOCCs, including LANDBANK and DBP, the total dividend collections for 2021 amount to P84.72 billion, which is 22.5 percent higher than 2019’s P69.17 billion.
Under the Duterte administration (July 2016 – December 2021), total dividend collections inclusive of dividend relief averaged P68.7 billion annually, more than double the level of the past administration (July 2010 – June 2016) which only collected an average of P27.5 billion-worth of dividends per year.
Assistant Secretary Soledad Emilia Cruz of the CAG said the high level of compliance by GOCCs to Republic Act (RA) 7656, or the Dividends Law, was the result of the DOF’s persistent efforts to ensure that even state-run firms with dividend deficiencies and arrears are able to remit either through staggered remittance arrangements or other payment options that may be warranted.
Under the Dividends Law, GOCCs are required to remit at least 50 percent of their net earnings to the National Government (NG).
Cruz said that for the remaining period of the Duterte administration, the CAG expects to collect at least P32 billion as dividend remittances of GOCCs by end-June 2022.
The CAG, headed by Finance Undersecretary Antonette Tionko, also made good use of the web-based GOCCs Liabilities and Monitoring System (GLAMS) to check the financial status of GOCCs.
Formerly known as the GOCC Debt Reporting and Monitoring System (GDRAMS), the GLAMS was transferred by the Governance Commission for GOCCs (GCG) to the DOF in July 2021 and was relaunched with enhanced features by CAG in August 2021.
In 2021, Cruz said the CAG was also successful in ensuring the full compliance by the different government insurance institutions (GIIs)–Social Security System (SSS), Government Service Insurance System (GSIS), and Philippine Health Insurance Corp. (PhilHealth)—to globally accepted insurance accounting standards known as the Philippine Financial Reporting Standards (PFRS) 4, so that these entities can correctly report their social benefit liabilities.
PFRS 4 provides the guidelines on the proper financial accounting of insurance contracts.
While full compliance with these standards does not affect the financial status and stability of the GIIs, it will help the government make informed decisions and policies regarding these institutions.
Dominguez commended the CAG for these initiatives and its other accomplishments, which, he said, should be continued and sustained by the next administration.
“Continuity is the important thing in these programs that we all started to ensure that they are not just going to fall by the wayside, but will be institutionalized, because you guys have done a terrific job,” Dominguez told the CAG.
The CAG also fulfilled its tasks of, among others, analyzing the financial and fiscal impact of decoupling the functions of the Philippine Amusements and Gaming Corp. (PAGCOR); evaluating the borrowings and funding requirements of the Power Sector Assets and Liabilities Management Corp. (PSALM); PSALM drawings from Malampaya Fund for its stranded contract costs and stranded debts, instead of imposing a universal charge, pursuant to the Murang Kuryente Act; providing inputs to legislative measures; assessing the tax subsidies of selected GOCCs; and recommending the abolition of the Northern Foods Corp. (DOF)