Finance Sec. Carlos Dominguez III He said he has discovered that some government-owned and controlled corporations and government financial institutions are not following the prescribed standards in accounting.
Dominguez cited the Social Security System, a GFI that “recognizes as income all their collections”.
“They do not set aside a reserve for future liabilities,” he noted.
Because of this, he said he would look into government’s contingent liabilities this year to ensure all their decisions are based on facts.
“This year, I’ve made it my project to look at all our contingent liabilities. One is PPP (public-private partnership). I’m also going to look at the contingent liabilities of SSS (Social Security System), GSIS (Government Service Insurance System), and PhilHealth (Philippine Health Insurance Corporation),” the Finance chief told members of the Management Association of the Philippines during the group’s 72nd inaugural meeting and induction of 2021 Board of Governors.
This move, he said, would be made to ensure that authorities’ decision-making are based on facts.
He said fiscal prudence, amidst the huge need to finance requirements for coronavirus disease 2019 programs, allowed the government to continue incurring a deficit-to-GDP (gross domestic product) ratio that is within the median in Asia and the countries with similar credit ratings.
“Despite the many populist excuses to blow up the deficit and bury future generations in debt, we chose to take the path of fiscal prudence. We did not abandon the judicious fiscal management set by President (Rodrigo) Duterte when he assumed office, which got us in our strong financial position ahead of the crisis,” he said.
The DoF chief said emerging deficit spending for 2020 amounts to around P1.36 trillion, or about 7.5 percent of projected GDP which is between -8.5 to -9.5 percent.
This is lower than the programmed deficit spending ceiling of P1.38 trillion, or about 7.6 percent of domestic output.
“We have made sure that the size of our deficit still takes into consideration our adherence to long-term debt sustainability,” he added.
The need for additional funds for pandemic-related programs made economic managers increase the borrowing program to P3 trillion for 2020, nearly double compared to pre-pandemic requirements.
Dominguez said the government raised around PHP2.63 trillion last year.
He said P1.91 trillion, or about 73 percent of these funds, were raised from domestic fund sources, while the balance of P721.1 billion came from development partners and the global bond market.
“We have set out a clear strategy for financing our deficit. We prioritized domestic borrowings followed by official development assistance and the international capital markets. We determined this plan as the most prudent approach, ensuring sustainability in our debt service,” he added.