Finance Secretary Ralph G. Recto on Wednesday, April 2, said the government is willing to return to the Philippine Health Insurance Corporation (PhilHealth) its P60 billion idle funds that had been turned over to the national treasury if ordered by the Supreme Court (SC).
However, during the oral arguments before the SC in Baguio City, Recto cautioned against the economic repercussions should the High Court order the return of the funds this year.
He disclosed that only the PhilHealth and the Philippine Deposit Insurance Corporation (PDIC) have remitted unused funds to the national treasury amounting to P60 billion and P104 billion, respectively.
Subject of the oral arguments are the three petitions that challenged the transfer of PhilHealth funds to the national treasury.
“Naturally, if the Supreme Court were to tell the Executive to return the money, we will include that in the national expenditure program for 2026,” Recto said.
“But having said that, assuming if the ruling were for 2025, that will add a fiscal pressure to our deficit and that would entail as not hitting our deficit target this year and if we miss that we may not attain our coveted credit rating upgrade that we foresee in the next 18 months,” he pointed out.
At the same time, Recto told the SC justices led by Chief Justice Alexander G. Gesmundo that the 2024 General Appropriations Act (GAA) allowed the taking of the idle funds of GOCCs (government owned and controlled corporations) to raise more resources to support President Marcos’ priority programs as part of the government’s economic recovery efforts after the Covid-19 pandemic.
He said that when President Marcos assumed office in 2022, the national debt had already surged by P6.8 trillion.
“This surpasses the combined debt of all previous administrations, bringing our debt-to-gross domestic product ratio from its lowest level of 39.6 percent in 2019 to a high of 60.9 percent in 2022,” Recto said.
“And now, it is our responsibility to repay these large borrowings. We inherited this debt, but we do not intend to simplify this burden onto the next administration. We intend to try our best to reduce it,” he added.
At the same time, Recto – an economist and former lawmaker – said that his department, the Department of Finance, is obligated to ensure that every peso is used efficiently and in service of the Filipino people.
“It is our duty to put every peso to work for the people. Hindi po pwede na kapag may nakitang malaking pondo na natutulog at hindi nagagamit para sa kapakanan ng taumbayan, hahayaan na lang. (It is not correct that if there are huge idle funds we should not use them for the welfare of the citizens). Sleeping funds serve no one. Every idle peso is a disservice to every Filipino,” he pointed out.
He compared the use of the GOCCs' idle funds to the Bayanihan strategy utilized by the government during the Covid-19 pandemic.
“Just as what we did during the pandemic through Bayanihan 1 and 2, we see this as a Bayanihan 3 -- a Bayanihan 3 not funded by new taxes, but one funded by the funds already in our possession,” Recto said.
“A Bayanihan 3 that mobilizes all our available resources -- all idle, excess, and sleeping public funds -- to help the economy recover faster, create more jobs, increase incomes, and reduce poverty in the process,” he stressed.
He cited the Marcos administration’s Medium-Term Fiscal Framework (MTFF) which aims to ensure long-term macro-economic stability.
“This move to sweep the unused, excess, idle funds of GOCCs is in line with the principles of our MTFF to ensure the country’s macro-fiscal stability,” he said.
“And that is to consolidate all public resources so that these are mobilized and utilized to gain the maximum benefit and high multiplier effects for the economy and the Filipino people,” he added.
He also said: “This Framework ensures that we reduce our fiscal deficit from a high of 8.6 percent to GDP in 2021 to only 3.7 percent in 2028. Last year, we already hit our target of reducing this to 5.7 percent. This will allow us to sustainably reduce our national government debt to 56.3 percent in 2028.”
Recto appeared before the SC during the continuation of the oral arguments on the consolidated petitions assailing the constitutionality of DOF Circular No. 003-204 and Section 1 (d) of XLIII of the 2024 GAA.
The DOF Circular directs the transfer to the national treasury of unused subsidies from GOCCs.
The petitions against the transfer of PhilHealth funds were filed by the groups of Sen. Aquilino Pimentel III and Bayan Muna Chairperson Neri Colmenares, and 1SAMBAYAN Coalition together with members of the University of the Philippines Law Class 1975, Senior for Seniors Association, Inc., Kidney Foundation of the Philippines, and other private individuals.
Named respondents in the petitions were Finance Secretary Recto, the House of Representatives represented by Speaker Ferdinand Martin Romualdez, the Senate represented by Senate President Francis Chiz Escudero; Executive Secretary Lucas P. Bersamin; and PhilHealth represented by its President Emmanuel Ledesma Jr.
The three petitions pleaded for the issuance of a temporary restraining order (TRO).
Last Oct. 29, the SC issued a TRO that stopped the transfer of the funds.
However, at the time the TRO was issued, a total of P60 billion in PhilHealth’s excess funds had been transferred to the national treasury – P20 billion last May 10, P10 billion last August 21, and P30 billion last Oct. 16.