Subsidies to state firms doubled to P14.16B

MANILA, Philippines—The government nearly doubled its spending for subsidies to state-owned companies in the first half of the year, veering away from the aim of making them less dependent on state funds as higher expenditure requirements prompted these firms to ask for more financial support.

Documents from the Department of Finance showed that subsidies to government-owned and -controlled corporations (GOCCs) reached P14.16 billion in the first half of the year, up 90 percent from P7.47 billion in the same period last year.

Under the fiscal program for 2011, the government was supposed to limit its spending on subsidies to state-owned firms at P20.47 billion.

Spending for subsidies in the second half should therefore be lower than that in the first six months to avoid exceeding the full-year ceiling set under the fiscal program.

The recipients of the biggest amounts of state subsidies in the first half included Philhealth (which got P5.1 billion), National Food Authority (P2.5 billion), National Power Corp. (P2 billion), National Housing Authority (P1.6 billion), and National Livelihood Development Corp. (P1.29 billion).

The increase in subsidies to state-owned firms in the first half did not mean the goal of reducing state support to GOCCs was being abandoned, officials said.

For next year, the Department of Finance wanted to reduce the government’s spending on subsidies.

Under the proposed fiscal program for 2012, spending for subsidies to state-owned firms should drop to P11.23 billion, which would be 45-percent lower than what has been programmed for this year.

The government’s spending on subsidies for the first half of this year accounted for about 2 percent of its total spending of P698.87 billion for the period. The finance department reported last week that the government incurred a budget deficit of P17.23 billion, with revenue collection reaching P681.64 billion.

Despite the increase in state subsidies, the budget deficit for the period marked a steep decline from the P197-billion shortfall in the same period last year and was much smaller than the deficit ceiling of P152 billion set for the first half of 2011.

The decline in the budget deficit in the first half was due to a decrease in other expenditures by the national government.

Finance officials said the deficit in the first half would result in a full-year budget gap that would be way below the P300-billion ceiling set for this year.

The government aims to gradually reduce the deficit over the medium term. Last year, the deficit stood at P314 billion.