fortunejack Remittance of idle funds pushes deposit insurance levels up—PDIC

Philippine Deposit Insurance Corp. (PDIC). INQUIRER FILE PHOTO

MANILA, Philippines—The country’s deposit insurance levels are consistent with international standards even after the Philippine Deposit Insurance Corporation (PDIC) remitted its idle funds to the Bureau of Treasury (BTr) in support of government-wide efforts to boost the economy by funding priority projects.

“We assure the public that after the remittance, the Deposit Insurance Fund (DIF) of the PDIC remains adequate to cover risks in the banking system and that the PDIC is still capable of delivering its services effectively, in case of insurance calls,” PDIC President Roberto B. Tan said.

During his speech at the 2023 Philippine Mineral Industry Environmental Award (PMIEA) in Malacañang, he emphasized the Philippines’ potential as one of the world’s mineral-rich countries.

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Auction results showed that the Bureau of the Treasury made a full award of P15 billion in reissued T-bonds, which have a remaining life of six years and nine months.

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“The DIF continues to be maintained within the target level set by its Board of Directors based on international best practices,” he added.

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The PDIC remitted P107.23 billion in compliance with the General Appropriations Act of 2024 and strictly in accordance with the opinion rendered by the Office of the Government Corporate Counsel (OGCC).

PDIC’s multibillion-peso remittance to the national government went to projects aimed at spurring economic activities.

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These include major infrastructure and social programs like maintenance, repair, and rehabilitation of major infrastructure facilities; aid to people in crises; food stamp programs; and others.

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The unutilized funds were used to support counterpart financing for foreign-assisted projects, including the Panay-Guimaras-Negros Island Bridges; the Metro Manila Subway Project, and others.

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These projects are envisioned to drive economic growth by generating employment, boosting incomes, and reducing poverty.

Following the remittance, the DIF now stands at P202.85 billion or 5.8 percent of the country’s estimated insured deposits. The target range ratio level set by the PDIC Board is 5 to 8 percent.

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The International Association of Deposit Insurers (IADI) recommends that most jurisdictions set a target reserve ratio of 2 to 5 percent of insured deposits, though the specific target may vary based on the risks and banking environment of a country.

For example, the United States target reserve ratio for their DIF is 2 percent of insured deposits, while in Canada the target is typically around 1.08 percent of insured deposits.

The IADI is a global standard-setting body dedicated to enhancing the effectiveness of deposit insurance systems worldwide.

Established in 2002 and headquartered at the Bank for International Settlements in Basel, Switzerland, the association promotes financial stability by developing international standards and providing guidance for deposit insurance practices.

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