Government subsidies to GOCCs hit P10.5 billion

MANILA, Philippines - The government has extended P10.502 billion in subsidies to government-owned and controlled corporations (GOCCs) and state agencies from January to July this year, more than double the P4.1 billion given in the same period last year, data from the Department of Finance (DOF) showed.

The drastic increase in subsidies was attributed to the continued funding support for the money-losing operations of the National Food Authority (NFA), which received a P2-billion subsidy in July alone, despite the country’s swelling budget deficit.

Also among those that received the highest subsidies as of end-July are the National Housing Authority (NHA), which is mandated to develop and implement a comprehensive and integrated housing program for the poor, with P924 million, and the Local Waterworks and Utilities Administration (LWUA), which oversees the development of provincial waterworks, with P400 million.

Finance officials said it was necessary to increase the subsidies to state agencies to help pump prime the economy.

During the seven-month period, the amount of subsidies released in July was the highest at P3.527 billion. In June, total government subsidies amounted to P1.947 billion.

The DOF is continuously reviewing the performance of GOCCs to determine which agencies may be recommended to Congress for abolition.

The Asian Development Bank (ADB) has pointed out that the Philippine government has not complied with its commitment to reduce the number of bleeding GOCCs, noting that some of these are suffering from weak institutional and regulatory frameworks.

The Finance department, for instance, is looking at ways to improve the finances of the NFA as the government continues to heavily subsidize the agency.

The cash-strapped agency is set to float P27 billion worth of 10-year bonds before yearend to refinance its maturing obligations.

The government will extend full guarantee to NFA’s bond float to make this attractive to investors, said National Treasurer Roberto Tan.

The Monetary Board earlier gave NFA the approval to float P35 billion worth of bonds. Last year, NFA raised P8 billion through the sale of zero coupon 10-year bonds.

NFA’s debt currently stands at roughly P108 billion, government data showed, yet the agency continues with its mandate to sell rice at a loss.

The National Government’s budget deficit has already widened to P188 billion as of end-July, or 462.5 percent more than the P33.4 billion shortfall recorded in the same period last year, as lower tax and revenue collections fail to offset a massive government spending program aimed at stimulating a weak domestic economy. 

In July alone, the deficit hit P34.6 billion or 124.4 percent more than the P15.4 billion deficit recorded a year ago.