Combined deficit of government firms projected to hit P47.8B this year

The combined deficit of the country’s non-financial state-owned corporations is expected to reach P47.8 billion this year, with total debts of over P1.4 trillion, the Department of Finance (DOF) reported over the weekend.

Data from the DOF indicated that government-owned and controlled corporations (GOCCs) would still generate losses of up to P47.8 billion this year despite measures already taken by the government, chiefly the increase in power rates for the National Power Corp. (Napocor).

DOF data showed that Napocor alone would be P18.41 billion in deficit this year, up from only P5.95 billion in 2005 although drastically lower than P73.38 billion in 2004.

The National Food Authority (NFA) followed as a close second with losses projected to reach P17.94 billion this year, down slightly from P22.09 billion last year but up from only P8.11 billion in 2004 and P3.69 billion in 2003.

The Napocor and the NFA are the government’s worst bleeders. NFA, in particular, is mandated to lose money by supporting the price of palay at the farmgate and the prices of in the markets.

On the other hand, the losses of the Light Rail Transit Authority (LRTA), National Irrigation Administration and the Philippine National Railways (PNR) are expected to reach P5.2 billion, P3.67 billion and P2.31 billion, respectively.

All three utility firms are also perennial bleeders since government subsidizes the transport fares for trains as well as irrigation fees in the agriculture sector where they are available.

Out of the 14 GOCCs being monitored closely by the government, only the four are expected to generate actual income this year, led by the National Development Corp. (NDC) whose income was projected to reach P1.35 billion this year.

NDC, the state’s official investment arm, would reverse its huge P4.07-billion loss in 2005.

On the other hand, the DOF reported that the National Electrification Administration was also expected to generate income of up to P1.21 billion this year, up from P770 million last year and P730 million in 2004.

The DOF has been struggling to convince Congress to amend some 40 special laws that mandated government subsidies for some 36 public and private corporations including airline companies.

Finance officials said the government’s complex incentives system has resulted in revenue losses equivalent to 6.97 percent of the annual domestic production, an amount more than enough to wipe out the entire budget deficit.

With ample backing from the International Monetary Fund (IMF), the DOF is pushing for the repeal of at least 40 special laws that granted these incentives in order to recover revenues of up to P12.27 billion a year.

The first sweep would remove the tariff exemptions on imported aircraft fuel currently enjoyed by Philippine Airlines, Cebu Air, Pacific Airways, Air Philippines and Aboitiz Shipping.

The remaining 36 laws would affect mostly government-owned and controlled corporations including Philippine Amusement and Gaming Corp., Philippine Ports Authority and the country’s national museums.

Special interest groups would also lose their fiscal perks once Congress amends the incentives provisions in such laws as the Campus Journalism Act, Science Act of 1958 and even such programs as the Promotion of Breastfeeding and Providing Rooming-in Facilities in Hospitals under Republic Act 7600.