PITC to return interest income from 'parked' funds

MANILA, Philippines — State trading company Philippine International Trading Corp. (PITC) will surrender to national coffers over P1 billion interest it earned from procurement funds said to have been "parked" in its bank accounts, which finance officials said could've been used for the government's pandemic response. 

"We have no problem on remitting the balance of interest income earned from the funds, especially if it is to fund the requirements to address the COVID-19 pandemic," Trade Secretary Ramon Lopez, whose agency oversees PITC, said in a Viber message on Monday when sought for comment.

Lopez was responding to questions about a letter he received last week from Finance Secretary Carlos Dominguez III, who asked PITC to remit to the National Treasury interest earnings amounting to P1.15 billion, which represents yields accrued from procurement funds deposited by various government agencies to PITC's bank accounts from 2018 to 2019.

The Finance chief said his request “is in line with our continuous efforts to identify sources of fiscal space and to accommodate the country’s various medical and social needs as a result of the pandemic, compounded by the successive calamities which recently hit the country.”  

As the country's only state trading firm, PITC is tasked to help businesses trade with new international markets and assist state agencies when purchasing goods abroad. According to DOF, procurement funds transferred by various government agencies to PITC — which are considered as trust liabilities of the PITC — hit P33.3 billion as of October 2019, although this amount went down to P32.6 billion as of end-October 2020.

To identify the exact amount of money to be returned, Lopez said he ordered PITC to "reconcile the numbers with [Department of Finance] to remit the balance of the interest income."

"As part of its mandate, PITC has to manage its funds and it has been remitting annually to the National Treasury the 50% of the interest income from the funds," he said.

Last week, Senate Minority Leader Franklin Drilon called out PITC for "parking" the procurement funds in its bank accounts so they can keep on generating interest. Drilon then cited a Commission on Audit report which flagged the PITC for violating the Government Auditing Code of the Philippines for recording interest earnings from idle funds as company income in their accounting books instead of surrendering them to national coffers.

In what he described as a "devious scheme," the lawmaker said PITC only returned to the Treasury 25% — or P392.6 million — of P1.41 billion total interest earnings generated from 2016 to 2019.

"They remit funds to make it appear they are compliant but, in reality, what they remit is 'loose change' compared to the amount that they are holding back from the government," Drilon said in a statement last week.