PFRS 4 will not affect cash flow of GSIs

COMPLIANCE with the Philippine Financial Reporting Standards (PFRS) 4 will not affect the cash flow or funding situations of government social institutions or GSIs, according to Finance Secretary Carlos Dominguez 3rd.

During a press briefing on Friday, Dominguez said one of the standards under PFRS 4, which provides guidelines on the correct financial accounting of insurance contracts, is to book and report social benefit liabilities or SBLs.

He said that under PFRS 4, when a policyholder pays premiums to an insurance company, the firm is required to set aside a reserve to meet existing and future claims made by its members.

“In the case of our government social institutions, their members pay contributions since they expect to receive a pension and other benefits from these institutions in the future,” said the Finance chief.

“Therefore, it is the responsibility of these institutions to book as liabilities the actual and future claims of their members based on actuarial computations. Collectively, these liabilities are called social benefit liabilities,” he added.

As a result, he told GSIs, including the Social Security System (SSS), the Government Service Insurance System (GSIS) and the Philippine Health Insurance Corp. (PhilHealth), to completely comply with the PFRS 4 when reporting their SBLs.

With the GSIs’ full compliance with the PFRS 4, their combined total liability climbed to P9.94 trillion in 2020 from P154 billion in 2019, which is more than half the size of the country’s total economy last year.

night as the Dow Jones, S&P 500 and Nasdaq gained 1.82 percent, 1.42 percent and 0.83 percent, respectively.

Onshore, property, financials and services closed in the green on Friday. Property climbed 72.77 points or 2.32 percent to 3,216.71; financials gained by 20.51 points or 1.33 percent to 1,558.49; and services rose by 8.42 points or 0.44 percent, to 1,938.52.

Meanwhile, mining and oil led the decline of local sectors by 1.13 percent to 9,362.03, followed by holding firms by 0.67 percent to 6,796.39 and industrial by 0.53 percent to 10,307.05.

Foreign transactions for the day ended with a net outflow of P181.59 million.

Advancers outpointed decliners 131 to 65 while 38 shares remained unchanged.

Total volume turnover was at 1.30 billion shares valued at P6.97 trillion.

SM Prime Holdings Inc. was the most actively traded on Friday, jumping 3.17 percent to P35.80. JG Summit Holdings Inc. was the main laggard, falling 3.73 percent to P56.80.