THE government stands to lose as much as P13.2 billion in revenue once a measure that seeks to help banks get rid of their bad assets amid a coronavirus pandemic is passed, the Treasury bureau said on Wednesday.
The estimate was based on the country’s experience during the Asian financial crisis in the 1990s, National Treasurer Rosalia V. de Leon told a Senate committee hearing on the Financial Institutions Strategic Transfer bill.
“We would highly appreciate it if the bill can be passed this September together with the Bayanihan 2 to be able to really maximize the benefits of all the emergency measures that the government is taking to be able to fight the pandemic,” she said.
The Bureau of Internal Revenue is opposing the tax exemptions under the bill.
The measure urges financial institutions to transfer bad loans to asset management companies, allowing them to focus more on lending activities amid the pandemic.
The transfer of the bad assets to management companies and from management companies to a third party will be exempted from taxes and reduced fees on registration and transfer.
The House of Representatives has passed a counterpart measure.
The measure is among the priority measures that President Rodrigo R. Duterte mentioned in his fifth State of the Nation Address in July.
Banks’ bad loan ratio as of June stood at 2.5%, and the banking industry has adequate buffers, Lyn I. Javier, the central bank’s managing director for Policy and Specialized Supervision, told senators.
Bad loans and assets can build up over time, and the central bank wants Congress to pass the bill so banks can offload these bad assets, she said. — Vann Marlo M. Villegas