Finance Secretary Carlos Dominguez III ordered state-run Land Bank of the Philippines and Government Service Insurance System to assist Philippine Crop Insurance Corp. in strengthening its financial state.
The Department of Finance said in a statement Monday Dominguez wanted the two agencies to work with PCIC in determining ways of efficiently managing its risks and enhancing its investment portfolio to ensure that taxpayers’ money used to subsidize the state-run firm’s operations are spent well.
Dominguez issued the directive in a meeting after finding out from PCIC’s recent presentation that it was spending 35 centavos for every peso that went out of the company.
GSIS president-general manager Rolando Macasaet said that compared to PCIC, the GSIS spends only around 3 to 5 centavos for every peso it gives out.
Dominguez, who chairs the Social Security Commission, said the Social Security System spends about 6 centavos for every peso going out of the pension fund.
The PCIC informed the corporation’s board chaired by Dominguez during its Nov. 19 meeting that it plunked P6.8 billion of its cash assets mostly in LandBank and the Bureau of the Treasury, which Dominguez said could have earned more money if the firm placed them in other, higher-yielding investments.
Dominguez told PCIC president Jovy Bernabe to instruct the firm’s Treasury Office handling the corporation’s investments to coordinate with the GSIS in finding ways to increase the yield of PCIC’s P6.8-billion cash assets.
Dominguez said the GSIS is in a better position to assist the PCIC regarding this concern as it was efficiently handling about P1 trillion in investments for the state pension fund and its members.
“Rolly [Macasaet] and [LandBank president and CEO] Cecille [Borromeo], can you take a lead on this. Let’s determine if we are doing the right thing here or do it in a way that is better,” Dominguez said after the PCIC’s presentation of its highlights of operations and other finance-related matters during the corporation’s third board meeting.
National Treasurer Rosalia de Leon said the cash being invested by PCIC comes from the subsidy provided by the government, thus, what they are investing in BTr is just like returning to the state coffers money that earns passively by incurring interest.
De Leon also reminded the PCIC that the source of its premium subsidies comes from the budget under the Agri-Agra Reform Credit Act, and once proposed amendments to this law are passed by the Congress and enacted, the firm would no longer be able to receive this allocation.
De Leon said under the proposed amendments to the law, a portion of the penalties paid by the banks to make up for their non-compliance with the provision to extend at least 25 percent of their total loanable funds to agriculture and agrarian reform beneficiaries would no longer go to the PCIC.
The funds will instead be utilized for the lending operations of LandBank and the Development Bank of the Philippines along with the Support to Parcelization of Lands for Individual Titling Program of the Department of Agrarian Reform.
Macasaet proposed that the PCIC expand its base of paying clients so that the firm could generate income from its insurance operations.
Dominguez and his fellow board members also learned during the meeting that the PCIC needed to correctly price the commodities covered by its insurance after the firm’s presentation showed that it was paying out claims more than it was collecting premium payments for certain types of crops or subsectors it covers.
Borromeo said the PCIC should properly assess the risks associated with different crops or subsectors so that it could correctly price the commodity it insures.
Dominguez said the PCIC should spread its risks and apply the best practices of other countries to improve its financial status.