Marcos EO cuts DBP’s dividend rate to 0% for 2021

State-owned Development Bank of the Philippines (DBP) will not have to remit to the national government half of its earnings in 2021 after President Ferdinand “Bongbong” Marcos Jr. on Thursday issued an order slashing its dividend rate to zero.

With Executive Order No. 8 dated December 9, Marcos mandated that the percentage of net earnings to be be declared and remitted by the DBP to the national government for 2021 be adjusted from 50% of its annual net earnings to zero percent.

According to the EO, the adjusted dividend rate or zero percent set forth is applicable only to the DBP for calendar year 2021.

One of the EO's premises indicated that the Secretary of Finance recommended the "downward adjustment" of the dividend rate in order to support the capital position of the DBP, allow it to comply with Bangko Sentral ng Pilipinas regulations, and to sustain its role in the economic recovery of industries adversely affected by the COVID-19 pandemic."

The order is pursuant to Republic Act No. 7656 or the measure requiring government-owned or -controlled corporations to declare dividends under certain conditions to the national government.

RA No. 7656 requires all government-owned or controlled corporations (GOCCs) to declare and remit at least 50% of their annual net earnings as cash, stock, or property dividends to the national government.

It also provides the President, upon the recommendation of the Finance secretary, may adjust the percentage of annual net earnings to be declared by GOCC, in the interest of national economy and general welfare.

The DBP was created for the primary purpose of servicing the medium and long-term needs of agricultural and industrial enterprises, and preferably for small and medium scale enterprises in pursuant to EO No. 81 as amended by RA No. 8523.

“The various programs of the DBP aim to address gaps in the agricultural sector and increase the resilience of the agricultural value chain in the pursuit of national food security, as well as to provide credit support for infrastructure and logistic facilities, micro, small, and medium enterprises, environment and social services and community development to drive immediate economic growth and recovery,” the order read. —Richa Noriega/NB, GMA Integrated News