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By Chino S. Leyco Reporter
THE Development and Budget
Coordinating Committee (DBCC)
has recommended halving the annual subsidy given to government-owned
and -controlled corporations (GOCCs) and government financial
institutions (GFIs).
The inter-agency body tasked with
setting the country’s macroeconomic goals said the tax expenditure
fund (TEF) will range from P10 billion to P11 billion, down from
last year’s P25 billion.
A DBCC source however said that
state-run firms have used up only P13 billion of last year’s
subsidy.
The reduction this year is in
line with the government’s plan to balance its budget. Last year,
it ended with a P9.4 billion budget gap, way below the P63 billion
ceiling for the period.
The source said the National Food
Authority (NFA) would receive only P7 billion this year, down from
P14 billion last year. The NFA uses the subsidy to support its
mandate of buying high from grains producers while selling low to
consumers.
The agency likewise pays the
tariffs on its imports using available funds under the TEF. The
reduction therefore would mean that the NFA would have to raise its
borrowings to make up for the shortfall.
To date, NFA’s outstanding debt
runs to P52 billion.
To finance the procurement of
grains, its capital expenditures, general fund requirements and
refinance maturing debt, the agency last month raised P10 billion
from borrowings through the sale of 10-year notes.
Last year, the NFA requested an
increase in its subsidy to P14 billion, but the Department of
Finance turned down its request and kept the grains agency’s share
at P10.5 billion.
Any additional subsidy request by
a state-run firm requires a review by the Fiscal Incentives Review
Board.
The Arroyo administration is
hard-pressed balancing its budget this year, as its two main revenue
agencies, the Bureaus of Internal Revenue and of Customs had warned
they are unlikely to meet their collection targets.
Last year, the government managed
to outperform its fiscal target due to record proceeds from asset
sales. Its privatization program netted over P90 billion, partly due
to the sale of the government’s controlling stake in the
country’s largest geothermal energy producer, Philippine National
Oil Co.-Energy Development Corp.
For this year, the finance
department had said that privatization proceeds would be reduced to
a third at P30 billion as the government has run out of big-ticket
assets to sell.
The dismal revenue outlook comes
at a bad time, as the government wants to crank up its expenditures
to mitigate the likely impact of a US economic slowdown. The US is
the Philippines’ largest export market and is home to a huge
overseas Filipino workforce.
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