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Business

Government to slash PCIC subsidies

Elijah Felice Rosales - The Philippine Star

MANILA, Philippines — The government plans to reduce its subsidies to the embattled Philippine Crop Insurance Corp. (PCIC) by 2023 as a way to force the state-run insurer to rethink its financial decisions.

Finance Secretary and PCIC board chairman Carlos Dominguez yesterday said he has  asked the Bureau of the Treasury and the Department of Budget and Management (DBM) to work together in overhauling the PCIC’s budget for next year.

In particular, the Treasury and the DBM were instructed to find a way to trim the PCIC’s financial strain on the 2023 expenditure plan projected to hit a record P5.24 trillion.

In doing so, Dominguez wants to compel the PCIC to evaluate the financial measures it is taking and prevent its resources from running low. For one, he said the PCIC should stop the practice of allowing foreign consultants to offer projects that only serve their interests.

Dominguez demanded PCIC officials to report any offers of perks, especially travel and vehicle, that foreign consultants dangle in exchange for project contracts. He also ordered that the PCIC board must approve a proposal before the agency seeks financing and starts implementation.

“We are the ones who determine what we need and we will be the one to select the funding, so in the future you will reject any approach that is not generated by this board,” Dominguez said.

Further, the Finance chief said the PCIC board approved the corporate budget of the agency for next year, but is subject to changes based on discussions to slash the subsidies it would receive.

Subsidies extended by the government to the PCIC rose by 46 percent to P4.61 billion in 2021 from P3.16 billion in 2020, according to the Treasury.

Dominguez proposed that commissions given to municipal workers, with an annual budget of at least P147 million, should be passed on to local government units. LGUs, he said, can afford to pay such incentives with increased share in the tax collections through the Mandanas ruling.

National Treasurer Rosalia de Leon, for her part, said the PCIC board would assess its options on where the agency’s funds could be invested to generate gains in the form of dividends. Based on records, the PCIC maintains an equity surplus of P1.1 billion.

Last year the Insurance Commission said that the bulk of PCIC’s assets, at about 40 percent, are invested as cash in banks and time deposits, exposing the agency to financial instability due to a lack of investment income to bankroll its operations.

Likewise, Dominguez said subsidies provided to the PCIC reached P28.6 billion in the past two decades, pushing it to the edge of financial collapse due to its reliance on state support.

PCIC

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