The country’s deposit insurance levels are in line with international standards, even after the Philippine Deposit Insurance Corp. (PDIC) has transferred its unspent funds to the Bureau of the Treasury (BTr) to support government efforts to stimulate the economy by financing national government expenditure. priority projects.
“We assure the public that after the transfer, the Deposit Insurance Fund (DIF) of the PDIC remains sufficient to cover the risks in the banking system and that the PDIC is still able to provide its services effectively, in the event of insurance calls,” PDIC President Roberto B. Tan said.
“The DIF remains within the target level set by the Board of Directors based on international best practices,” he added.
The PDIC transferred P107.23 billion in accordance with the mandate of Congress under the General Appropriations Act of 2024 and strictly in accordance with the advice of the Office of the Government Corporate Counsel (OGCC).
The PDIC’s remittance of millions of pesos to the national government went towards projects aimed at stimulating economic activities, which were expected to lead to increased deposits in banks and the growth of financial institutions to provide more financial products and services to Filipinos in to deliver throughout the country.
These include major infrastructure and social programs such as the maintenance, repair and rehabilitation of major infrastructure facilities; protective services for individuals and families in difficult circumstances/assistance to individuals in crisis situations; the Philippine Food Stamp Program; and various projects to promote the government’s disaster-related infrastructure projects; and rural electrification efforts through the financial subsidy for the purchase of photovoltaic mainstreaming (Solar Home System).
In addition, the unspent funds were used to support counterpart financing for foreign-supported projects, including the Panay-Guimaras-Negros Island Bridges; the Metro Manila subway project; the Philippine Multisectoral Nutrition Project; the Mindanao Inclusive Agriculture Development Project; the Cebu-Mactan Bridge and Coastal Road Construction Project; the North-South commuter rail system; the support for the subdivision of land for individual title projects; the project to improve the effectiveness and competencies of teachers; and the Philippine Fisheries and Coastal Resiliency Project, among others.
These projects are intended to stimulate economic growth by generating employment, increasing incomes and reducing poverty, creating a positive multiplier for society.
After the transfer of 107.23 billion euros to the national government, the DIF now amounts to 202.85 billion euros, or 5.8% of the country’s estimated insured deposits. The target achievement ratio level set by the PDIC Board is between 5% and 8%.
The International Association of Deposit Insurers (IADI) recommends that most jurisdictions set a target reserve ratio between 2% and 5% of insured deposits, although the specific target may vary based on a country’s risks and banking environment.
For example, the United States’ target reserve ratio for its DIF is 2% of insured deposits, while in Canada the target is typically around 1.05% of insured deposits.
The IADI is a global standard-setting body committed to improving the effectiveness of deposit insurance systems worldwide. Founded in 2002 and headquartered at the Bank for International Settlements in Basel, Switzerland, the association promotes financial stability by developing international standards and providing guidelines for deposit insurance practices.
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