Government urged to return PDIC funds

MANILA, Philippines — The country’s largest business organizations are urging the government to return more than P107 billion remitted by the Philippine Deposit Insurance Corp. (PDIC) to the National Treasury, warning that the move risks undermining confidence in the financial system.

In a joint statement yesterday, business groups said the transfer of PDIC’s accumulated resources in 2024, recorded as dividend collections from government-owned and controlled corporations, raises concerns about the integrity of the deposit insurance system.

These groups include the Financial Executives Institute of the Philippines, Institute of Corporate Directors, Makati Business Club, Philippine Chamber of Commerce and Industry as well as the Philippine Finance Association.

“The Philippine banking sector continues to demonstrate resilience and discipline amid economic headwinds. However, public confidence remains its most valuable asset. The PDIC must remain independent, transparent and sufficiently capitalized to perform its core mandate of protecting depositors,” the statement read.

“Returning the remitted funds will reaffirm that the resources of the PDIC are reserved exclusively for their intended purpose, to safeguard the savings of the Filipino people and to uphold confidence in the financial system.”

Officials have insisted that PDIC’s Deposit Insurance Fund, used to pay insured depositors in case of bank closures, remains intact and that its DIF-to-estimated insured deposits ratio of 7.83 percent is above the 6.5-percent target.

But the business groups countered that “the act of transferring any part of PDIC’s reserves to the Treasury raises serious concerns,” noting that the institution was created specifically to protect depositors and preserve financial stability.

The remittance was enabled by a special budget provision under the 2024 Unprogrammed Allocations, linked to the ongoing flood control controversy.

The groups warned that the action “sets a dangerous fiscal precedent,” blurring the line between fiscal maneuvers and financial safety nets, and “creates uncertainty about the independence and integrity of the deposit insurance system.”

They added that it poses reputational risks for the government and regulators at a time when the public is already wary due to corruption scandals and fiscal pressures.

The organizations called on the Department of Finance and Congress to “return the full P107 billion” to PDIC and restore it in the 2026 national budget, ring-fence the DIF from future remittances and publish transparent disclosures on PDIC’s current and projected capacity to respond to systemic shocks.

“We therefore urge our policymakers, as they deliberate on the 2026 National Budget, to restore the transferred funds and strengthen the institutional integrity of the PDIC as the nation’s last line of defense for depositors,” the groups said.