FINANCIAL OVERVIEW

FINANCIAL OVERVIEW

SUMMARY OF FINANCIAL STATEMENTS

GOCC SECTOR FINANCIAL SUMMARIES

(in P Millions)
Source: COA 2016 Annual Financial Report for the GOCCs, and 2017 Unaudited Financial Statements of GOCCs

SIZE OF THE SECTOR



The total assets of the GOCC Sector had a net increase of P709.16 billion, or 10.33% from 2016 with about 73% of GOCCs reporting an increase in total assets as of the end of 2017.

TOTAL ASETS OF THE GOVERNMENT CORPORATE SECTOR


TOTAL ASSETS 2016 - 2017
(in P Millions)
  • GFI - Government Financial Institutions
  • TADT - Trade, Area Development and Tourism
  • E&C - Educational and Cultural
  • GAM - Gaming
  • E&M - Energy and Materials
  • AFF - Agriculture, Fisheries and Food
  • U&C - Utilities and Communication

The total assets of the GOCC Sector had a net increase of P709.16 billion, or 10.33% from 2016 with about 73% of GOCCs reporting an increase in total assets as of the end of 2017.

In terms of absolute amount, GOCCs under the Utilities and Communication Sector had the biggest downward change amounting to P63.79 billion, primarily brought about by the P136.03 billion decrease in the total assets of the National Irrigation Administration (NIA). Such decrease in NIA’s total assets was due to the reporting differences in the consolidation of its books.

Nonetheless, the net increase in 2017 in the total assets of the entire GOCC Sector was leveraged by substantial increases mainly from the continued growth and expansion of government banks and social security institutions amounting to P455.53 billion, as well as a surge increase of P292.46 billion in total assets of the Agriculture, Fisheries and Food Sector brought about by the recognition and recording of Intra-Agency Receivables of the National Food Authority (NFA) in accordance with the prescribed financial reporting of the Commission on Audit (COA). Collectively, the Government Financial Institutions Sector accounts for 63.66% of the total assets of the GOCC Sector at P4.82 trillion.

TOTAL LIABILITIES OF THE GOVERNMENT CORPORATE SECTOR


On the other hand, liabilities totaled at P4.30 trillion in 2017, representing a 17.72% net increase from the previous year. Most of the total liabilities come from the Government Financial Institutions Sector with 56%, and the Energy and Materials Sector with 23% of the 2017 year-end balance. Except for the Utilities and Communications and the Realty/Holding Companies Sectors, all other Sectors had reported an increase in total liabilities, resulting to a net upward change of P647.11 billion for the year.

TOTAL LIABILITIES 2016 - 2017
(in P Millions)
  • GFI - Government Financial Institutions
  • TADT - Trade, Area Development and Tourism
  • E&C - Educational and Cultural
  • GAM - Gaming
  • E&M - Energy and Materials
  • AFF - Agriculture, Fisheries and Food
  • U&C - Utilities and Communication

In terms of percentage and absolute amount, the Agriculture, Fisheries and Food Sector reported the biggest increase at 167.78% and P299.28 billion, respectively. Such increase in the Sector’s liabilities is mainly due to the recognition and recording of Intra-Agency Payables of NFA during the year, which is also in accordance with COA-prescribed financial reporting. Conversely, for the GOCCs reporting a decline in their total liabilities, the biggest decreases in terms of absolute amounts are from the Government Service Insurance System (GSIS) and National Electrification Administration (NEA) at P3.95 billion and P3.49 billion, respectively.

NET WORTH OF GOCCS


The total net worth of the entire GOCC Sector marginally grew by P52.89 billion or 1.64% from 2016. It is highlighted that the changes in the Government Financial Institution (GFI) Subsector weighs in the most as it constitutes 74.22% of total net worth of the entire GOCC Sector. However, the 7.3% improvement in net worth of the GFI Sector is significantly negated by the decrease in the Energy and Materials, and Utilities and Communications Sectors, specifically, the National Transmission Corporation (TRANSCO), Power Sector Assets and Liabilities Management Corporation (PSALM), and National Irrigation Administration (NIA).

TOTAL NET WORTH 2016 - 2017
(in P Millions)
  • GFI - Government Financial Institutions
  • TADT - Trade, Area Development and Tourism
  • E&C - Educational and Cultural
  • GAM - Gaming
  • E&M - Energy and Materials
  • AFF - Agriculture, Fisheries and Food
  • U&C - Utilities and Communication

On the other hand, the net worth of the Civil Aviation Authority of the Philippines (CAAP) under the Utilities and Communications Sector almost tripled from P24.63 billion in 2016 to P78.42 billion in 2017. Other GOCCs with notable increase in net worth are Government Service Insurance System (GSIS), Home Mutual Development Fund (Pag-IBIG), Social Security System (SSS), Philippine Deposit Insurance Corporation (PDIC), Al-Amanah Islamic Investment Bank of the Philippines (AIIBP), and Land Bank of the Philippines (LandBank).

GOVERNMENT FINANCIAL SUPPORT TO GOCCs

98% of subsidies released to GOCCs are program or project funds. Program or project funds are finances coursed through GOCCs to more efficiently implement specific projects or programs in the fulfillment of the vision of the National Government.

SUBSIDIES TO THE GOVERNMENT CORPORATE SECTOR


There is a need to correct the perception of the public on subsidies as the term subsidy has been equated to the underperformance of agencies, or its inability to cover its operating expenses resulting in the incurrence of corporate deficits and losses. While this may be true in some cases, it should be noted that about 98% of subsidies released to GOCCs are program or project funds. Program or project funds are finances coursed through GOCCs to more efficiently implement specific projects or programs in the fulfillment of the vision of the National Government. Thus, any movement in the amounts of government subsidies could not be considered as an accurate measure of the performance – financial or otherwise – of GOCCs.

Program funds given to GOCCs have different intent and purpose depending on the priority of the government. These can be used to implement infrastructure projects; as in the case of infrastructure projects implemented by the National Irrigation Administration (NIA) and the National Housing Authority (NHA). In 2016, the NIA received P16.91 billion or about 18% of the total program funds released to GOCCs amounting to P96.28 billion. The fund released to NIA supported the construction, operation, and maintenance of national and communal irrigation systems. A significant increase of about 78% was also noted in the funding to NIA which amounted to P30 billion in 2017. NHA, on the other hand, received P12 billion in 2016, and P19.56 billion in 2017. The fund released to NHA, which pertains to about 16% of the total budgetary support in 2017, was intended for the construction of the housing needs and resettlement of informal settlers, residents in danger areas, and calamity victims.

Aside from the implementation of infrastructure projects, program funds are also used to finance the provision of basic human needs and protection of the vulnerable sector of the society. Programs such as provision of universal health care services implemented by the Philippine Health Insurance Corporation (PhilHealth) deliver direct benefits to its intended beneficiaries. Of the total subsidies in 2016, 45% or P43.78 billion was released to PhilHealth to cover the payment of premium contributions and medical claims of the subsidized sector such as the indigent members, senior citizens, and sponsored members. It remained as the top recipient of budgetary support in 2017 given its 38% share in the total subsidies amounting to P123 billion. Program funds coursed through the Philippine Crop Insurance Corporation (PCIC), which amounted to P2.5 billion in 2017, are used to cover the payment of insurance premium of farmers and fisherfolks to protect them and cushion the effects of damages or losses arising from, but not limited to, calamities and pests.

OPERATING SUBSIDIES (in P Millions)
Funds released to the GOCC to cover operational expenses that are in excess of its revenues
Source: General Appropriations Act (GAA) of the Department of Budget and Management (DBM)

FINANCIAL RETURNS

The GOCC Sector continued to return significant amount of its income to the national coffers through dividend remittances. Under Republic Act (R.A.) No. 7656, otherwise known as the Dividends Law, GOCCs are required to declare and remit at least fifty percent (50%) of their annual net earnings as cash, stock or property dividends to the National Government (NG).

DIVIDEND REMITTANCE


DIVIDEND REMITTANCE
(in P Billions)

The GOCC Sector continued to return significant amount of its income to the national coffers through dividend remittances. Under Republic Act (R.A.) No. 7656, otherwise known as the Dividends Law, GOCCs are required to declare and remit at least fifty percent (50%) of their annual net earnings as cash, stock or property dividends to the National Government (NG). The law also provides exemption to social security institutions such us, but not limited to: Government Service Insurance System (GSIS), Home Development Mutual Fund (PagIBIG), Social Security System (SSS), Philippine Health Insurance Corporation (PhilHealth), and Employees Compensation Commission (ECC).

The dividends turned over to the Bureau of Treasury (BTr) in 2017 are based on the total earnings of the GOCCs in 2016. For 2017, the BTr has recorded a total amount of P26.80 billion dividends received from the GOCCs covered by Republic Act (R.A.) No. 10149. This is 0.18% lower than the 2016 total amount of P26.85 billion. GOCCs such as the Mactan-Cebu International Airport Authority (MCIAA), Philippine Reclamation Authority (PRA), and Philippine Amusement and Gaming Corporation (PAGCOR), have posted significant decline in the remitted dividends totaling to P6.37 billion, while the remittances of the Manila International Airport Authority (MIAA), National Development Company (NDC), National Power Corporation (NPC), and Philippine Deposit Insurance Corporation (PDIC) showed extraordinary increases in 2017 totaling to P7.31 billion.

Furthermore, GOCCs who have managed to be included in the prestigious “Billionaire’s Club” for having remitted at least P1 billion to the NG, declined from eight (8) in 2016 to seven (7) by 2017. These are PDIC (P7.46 billion), Civil Aviation Authority of the Philippines (CAAP) (P5.39 billion), Development Bank of the Philippines (DBP) (P2.52 billion), MIAA (P2.23 billion), Philippine Ports Authority (PPA) (P1.96 billion), NPC (P1.40 billion) and PAGCOR (P1.18 billion).

Noticeably, LandBank was not included in the list as the Department of Finance (DOF) recommended to President Duterte a zero-dividend rate for its 2016 net income in order to comply with the Regulatory Requirement of the Bangko Sentral ng Pilipinas on Capital and Basel III Leverage Ratios. The zero-dividend rate on the bank’s 2016 net income is in lieu of the P10 billion requested equity infusion by LandBank. The bank has remitted a total of P18.6 billion to the NG for the past three (3) years. However, the reappearance of CAAP and the Clark International Airport Corporation (CIAC) in the list have somehow compensated the loss from LandBank’s dividend remittance. Below is a table showing the top ten (10) remitting GOCCs: