THE large government interest subsidy needed to finance the President’s housing program may render it unsustainable, given that 6 million houses need to be subsidized in order to plug the country’s housing backlog.
This was raised by Marikina Representative Stella Luz A. Quimbo during the Department of Human Settlement and Urban Development (DHSUD) budget hearing on Tuesday. While an interest subsidy of P1.5 billion in 2024 may be doable, this does not cover all these projects.
At the hearing, DHSUD Undersecretary Roberto Juanchito T. Dispo said the P1.5-billion interest subsidy only covered about 50,000 housing units under the Pambansang Pabahay Para sa Pilipino Program (4PH).
Speaking partly in Filipino, Quimbo said she raised the question because, “of course, the P1.5 billion is a big sum and that means, for 30 years, we will be paying P1.5 billion. On top of that, should we add more units next year of another 50,000, [that’s] P1.5 billion plus another P1.5 billion and so on and so forth. Let’s remember, your target is 6 million.”
“Actually, once the amount becomes that huge. That’s hard. I tell you now, the P1.5 billion is manageable, but when it swells, that’s difficult,” she also said.
Dispo explained that DHSUD’s the assumption is that P36 billion worth of interest subsidy is needed annually for 1 million housing units. This means, interest subsidy could reach P216 billion annually for 6 million housing units.
This is not just for one year, but for several years considering that the cost of each unit is P1.2 million and is payable for 30 years. Under the 4PH, beneficiaries will only pay 1 percent of the interest of the housing loan needed to pay for their units.
However, this is based on an interest rate of 6 percent. If the interest rate climbs above 6 percent, the government subsidy will also increase but if the interest rate decreases, the Filipino taxpayers will subsidize the program at a lower rate.
“Internally, we’re studying to let the interest subsidy run for the next 30 years on the assumption that the beneficiaries will improve their lives with the increase in salary, increase in the value of the property. So there’s a weaning away period, as we call it. We have an internal study, probably 10 years would be the maximum that the interest subsidy program will run,” Dispo said.
Quimbo said that instead of obtaining the interest subsidy from the national budget, one option is for the Pag-Ibig Fund to shell out the subsidy. However, Pag-Ibig Fund Chief Executive Officer Marilene C. Acosta said the fund is already subsidizing the housing costs of minimum wage workers.
Acosta explained that while the regular interest rate of Pag-Ibig is at 6.25 percent, their affordable housing program offers loans at only 3 percent for socialized housing packages intended for minimum wage earners.
DHSUD Undersecretary Garry V. de Guzman, meanwhile, said the use of DHSUD’s escrow funds is another option being considered as a source of funding for the interest subsidy apart from obtaining it from the national budget. This is a viable option, de Guzman said, especially if only 50,000 units will be considered annually. He admitted, however, that this is not enough given the number of housing units that need interest subsidy.
DHSUD Secretary Jose Rizalino Acuzar agreed with Quimbo’s concerns and said “Totoo po yan. Namomroblema na din po kami sa ganyang kwentuhan. Yung 36 billion a year, another 36 billion a year, yung 3 million (units), you need about 100 million subsidy. Aaralin po naming lahat yan.”
[That’s right. We are also finding problems with that accounting. The P36 billion a year, another P36 billion; the 3 million units, you need about P100 million subsidy. We will review all that].
Apart from the side of the government, other lawmakers also pointed out that the 1-percent charge for housing units for 4PH beneficiaries may still be too steep for poor households.
Alliance of Concerned Teachers Representative Francisca Lustina Castro and Gabriela Partylist Rep. Arlene D. Brosas raised this concern given that poor households only earn P600 a day or, in some cases, the lowest is a wage of P390 per day.
Brosas went on to say that with earnings of around P1,000 a week, poor households may not be able to pay for the amortization of their houses. She also noted that the last time there was a major increase in salaries was in 1985.
The 4PH is considered a flagship program of the government through Memorandum Circular 24 series of 2023 or the Bagong Pilipinas Campaign and Executive Order 34 series of 2023 mandating government agencies to submit their idle land inventory to the DHSUD for use in the program.