THE ADOPTION of Philippine Financial Reporting Standards (PFRS) has resulted in a net loss of P703.59 billion in 2021 for government-owned and -controlled corporations (GOCCs), up from P346.54 billion a year earlier, after the new accounting norms forced the recognition of major liabilities among government insurers, the Department of Finance (DoF) said.

In a statement on Tuesday, the DoF said the findings were contained in a Corporate Affairs Group (CAG) report on the 108 GOCCs’ performance from an examination of unaudited financial statements.

“The results of operations of the government corporate sector dropped to a P703.59 billion net loss in 2021 from a P346.54 billion net loss in 2020 primarily because of the recognition of the Insurance Contract Liabilities (ICL) by GOCCs classified as government insurance institutions when the Philippine Financial Reporting Standards (PFRS) was adopted in reporting their financial statements,” the DoF said.

“Before the PFRS adjustments, the results of operations of these corporations totaled a net income before tax of P324.63 billion in 2021 or a 19% increase from the P273.66-billion level in 2020. The results of operations in 2021, sans the PFRS adjustments in the social security institutions’ reports, shows that the GOCCs are starting to bounce back to their 2019 net income before tax level of P342.89 billion.”

In terms of assets, the DoF said the 31 most significant GOCCs are also signaling a recovery in the broader economy.

CAG found that the 31 major GOCCs had total assets of P10 trillion, against liabilities of P16.22 trillion, up 7% and 9% respectively.

The assets of the 31 GOCCs totaled P9.37 trillion. Taken as a group, the assets of all 108 GOCCs amounted to P10.3 trillion in 2020, the DoF said.

The 31 GOCCs are “considered fiscally significant either as major contributors to the revenue of the National Government (NG) or as recipients of direct and indirect support from the NG,” Finance Assistant Secretary Soledad Emilia F. Cruz was quoted as saying.

The big GOCCs “are the major drivers of the financial and fiscal health of the government corporate sector. These assets (are equivalent to) about half of the country’s gross domestic product (GDP),” CAG said.

Remittances from 15 of these 31 GOCCs totaled P30.8 billion, or over half of the P57.55 billion in total dividends generated in 2021.

The 31 GOCCs are the Philippine Deposit Insurance Corp., National Power Corporation, National Transmission Corp., Philippine National Oil Company, Philippine Economic Zone Authority, Bases Conversion and Development Authority, and Philippine Ports Authority;

The Power Sector Assets and Liabilities Management Corp., Philippine Amusement and Gaming Corp., Philippine Charity Sweepstakes Office, Manila International Airport Authority, Civil Aviation Authority of the Philippines, Land Bank of the Philippines, Development Bank of the Philippines, Social Security System (SSS), Government Service Insurance System (GSIS), and Philippine Health Insurance Corp. (PhilHealth);

The National Food Authority, National Development Co., Metropolitan Waterworks and Sewerage System, Local Water Utilities Administration, National Housing Authority, National Irrigation Administration, Philippine National Railways, Light Rail Transit Authority, National Electrification Administration, Philippine Guarantee Corp., Home Development Mutual Fund, Philippine Crop Insurance Corp., Social Housing Finance Corp., and National Home Mortgage Finance Corp.

Ms. Cruz said that various reforms, including the Rice Tariffication Law, the Social Security Act, and the Murang Kuryente Act, which took effect in 2021, helped increase the revenue of many GOCCs, which as a whole helped improve their operations.

“The movements in macroeconomic indicators, such as the currency exchange rate and interest rates, are significant variables and propellers of their operations.”

“The overall performance of the sector for 2021 reflects the firm resolve of the government to promote transparency in the financial health of the government corporations through adherence to international reporting standards and best practices and related laws, rules, and regulations,” the DoF said.

In December 2021, Finance Secretary Carlos G. Dominguez III directed PhilHealth, SSS, and GSIS to estimate their social benefit liabilities to reflect the PFRS 4 standard dating back to 2020 results.

“PFRS 4 is the current and interim accounting standard imposed on insurance entities in the Philippines,” the DoF said.

The combined ICL of GSIS, SSS, and PhilHealth was estimated at P10.81 trillion in 2021, up 10% from the previous year. — Tobias Jared Tomas