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DOF willing to forgo P65 B for FIST

The Department of Finance (DOF) is willing to forego up to P65 billion in potential revenues for the next five years to ensure the strength of the country’s banking system and help the economy recover faster from the global economic downturn.

Finance Secretary Carlos G. Dominguez III said yesterday that they support the proposed measure seeking to help banks and other financial institutions recover their losses from bad debts and other non-performing assets (NPAs).

While the proposed Financial Institutions Strategic Transfer (FIST) Act will erode government revenues, Dominguez said this measure would help preserve the strength of banking institutions, which is beneficial to the local economy.

  Based on DOF estimates, the pending FIST law entails foregone revenues of P3.3 billion to P13 billion every year for the next five years, or P16.5 billion to P65 billion in total.

 “We believe that the economic benefits of strengthening the financial sector through this effort outweigh the fiscal costs of doing so,” Dominguez said during a joint virtual Senate hearing of the Committees on Banks, Financial Institutions and Currencies as well as Ways and Means.

 “We are willing to forego revenues from P3.3 billion – or if all avail of the tax benefits – to P13 billion every year for the next five years to clear the banks’ books and keep the economy going,” he added.

 The finance chief explained the FIST law will protect the financial sector from any lasting damage from the unprecedented economic crisis by guaranteeing a steady source of credit for the pandemic-hit sectors of the economy while providing safeguards to consumers.

  He recalled that to stem the damage to the economy of the 1997 Asian financial crisis that lasted till the early 2000s, a similar measure—the Special Purpose Vehicle (SPV) Act of 2002–was passed by the Congress.
           

But Dominguez said this law was enacted only five years later when most distressed businesses had already recovered and able to meet their financial obligations.
       

 Had the SPV law been available earlier at that time, the local banks could have helped businesses recover faster, Dominguez told senators.
       

“This time, we are acting swiftly and proactively while our banks’ asset quality is still relatively solid. Financial institutions also need time to learn how to use these instruments, Your Honors, now is the time to act,” he said.
           

The FIST bill was among the priority measures that President Duterte urged  Congress during his 5th State-of-the-Nation Address (SONA) last July 27 to act on quickly as part of the government’s economic recovery program.   
         

 The House of Representatives had already passed its version of the FIST bill on third and final reading before the sine die adjournment of the Congress in June.

 “Enacting FIST will fortify the financial sector and keep it strong and stable for the difficult task of rebuilding our economy,” Dominguez said.


Source: Manila Bulletin (https://mb.com.ph/2020/09/02/dof-willing-to-forgo-p65-b-for-fist/?utm_source=rss&utm_medium=rss&utm_campaign=dof-willing-to-forgo-p65-b-for-fist)

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