Gov’t subsidies to hit record high in ’16

The national government plans to ramp up budgetary support to state-run corporations next year, with subsidies expected to reach a record-high P96.1 billion.

The Budget of Expenditures and Sources of Financing document for fiscal year 2016 showed that the proposed total budgetary support for government-owned and -controlled corporations (GOCCs) next year would increase to P127.1 billion from the projected P74 billion this year and the P80.3 billion released in 2014.

Budgetary support for GOCCs comes in the form of subsidy, equity and net lending, net of tax subsidy and loans outlay, gross of special accounts.

Of the proposed 2016 amount, P96.1 billion would be subsidies, P31 billion in equity and P26.5 million in the form of net lending.

The amount of subsidies to be given away next year would exceed the P78.9 billion released in 2014 and P72.1 billion for release this year.

Poised to receive the biggest subsidy next year is the National Irrigation Administration (NIA) with P32.7 billion, followed by the National Housing Authority’s (NHA) P30.5 billion. The proposed subsidies to these two agencies combined would already comprise two-thirds of the total. This year, NIA would get an estimated P28.8 billion in subsidies while NHA would have P7.5 billion.

The latest Treasury data showed that subsidies released to GOCCs as of end-May jumped 180.5 percent year-on-year to P9.02 billion.

In most cases, the national government subsidy covers GOCCs’ operating expenses that are not being supported by corporate revenues. Subsidies may also be spent on specific programs and projects.

Government financial institutions (GFIs) Development Bank of the Philippines and Land Bank of the Philippines would be granted P10 billion and P20 billion, respectively, in equity.

Budget Secretary Florencio B. Abad said last Tuesday that this equity infusion would be in compliance with Basel 3 requirements to improve the resilience of these banks and strengthen the banking system as a whole.