The Department of Finance (DOF) said Tuesday the utilization of idle funds from government-owned and controlled corporations (GOCCs), including Philippine Health Insurance Corp. (PhilHealth) is a more strategic approach to funding government projects than raising taxes or borrowing.
Finance Secretary Ralph Recto said the agency is merely adhering to Congress’ order under the General Appropriations Act (GAA) of 2024, adding that the benefits and contributions of PhilHealth members would remain untouched, and that the projects to be financed by the excess funds would create more jobs and accelerate the country’s economic growth.
“To fund the unprogrammed appropriations, Congress determined that there is another way aside from new taxes as well as debts. This is through the collection of idle and unused funds from GOCCs whose interest rate is being paid by the government. This is contained in the 2024 GAA, which we are following,” Recto said in a statement.
Recto addressed erroneous statements making rounds in social media, emphasizing the legal basis behind the use of the PhilHealth’s unutilized funds to finance projects under the Unprogrammed Appropriations. He said the DOF moved in line with Republic Act No. 11975 or the GAA 2024, which was approved by Congress.
The DOF first reviewed and studied the provision to determine its merit, assessing if it would help in growing the economy.
The DOF also consulted the Governance Commission for GOCCs (GCG) and sought the legal opinions of the Government Corporate Counsel (OGCC) and the Commission on Audit (COA) to ensure full compliance with the law. Darwin G. Amojelar
The DOF received favorable legal opinions on the matter and was advised that PhilHealth’s P89.9 billion unutilized government subsidies are not part of its reserve funds, nor income that is being restricted by the Universal Health Care Act to be used by the national government as a general fund.
Recto assured the public that the funds would benefit health-related projects, which in fact enabled the national government to release the P27.5 billion representing 5.04 claims of long-overdue benefits and allowances of frontliners during the pandemic.
The projects under the list of unprogrammed appropriations include but are not limited to the Davao City By-Pass Construction Project; Samal Island Davao City Connector Project; Panay-Guimaras-Negros Island Bridges; Bataan-Cavite Interlink Bridge Project; Metro Manila Subway Project; and the Salary Standardization VI for government employees.
“Our cost-benefit analysis shows that the projects to be funded by the unprogrammed appropriations—which the Congress ordered–will hike real [gross domestic product] GDP growth by 0.7 percent, increase an additional P23 to P24.4 billion in revenues and create hundreds of thousands of jobs,” Recto said.
Implementing these projects will help the government hit its target of 6 percent to 7 percent growth for the year, especially after Typhoon Carina ravaged Metro Manila, the country’s economic powerhouse that comprises 31 percent of its GDP, he said.
Recto said many of the projects are official development assistance (ODA) or foreign assisted projects, under which the government is committed to honor its financing obligations, or failing to do so, pay commitment fees and interests on the loans.
“[I]f we deny them of funding, the implementation is delayed, and we rack up opportunity costs that will be borne by the public deprived of the conveniences such projects bring,” he said.
Recto warned that if the projects were to be funded with additional borrowings, it would increase the country’s deficit-to-GDP ratio from 5.6 percent to 6.4 percent in 2024, and also hike the debt-to-GDP ratio from 60.6 percent to 61.4 percent this year.
This means that the country will have to pay an additional P12.7 billion in interest payments every year.
“In effect, we will not hit our medium-term fiscal program. And this may put pressure on our investment grade rating,” he said.
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