Lessen dependence on gov’t subsidies, DBM tells state firms, GFIs

Amid a protracted fight against COVID-19 that put strain on public funds, the Department of Budget and Management (DBM) is urging state-run corporations and government financial institutions (GFIs) to have greater “financial independence” by raising additional money through privatization and enhancement of corporate revenue generation.

In the corporate budget call for fiscal year 2022 issued by Budget Secretary Wendel Avisado on Jan. 12, the DBM chief asked government-owned and/or -controlled corporations (GOCCs) and GFIs to exhaust all their financial means first before seeking budgetary support.

The national government supports GOCCs mainly through subsidies for their operations, programs and projects. It also injects equity into state-run firms to fortify capitalization and public investment, especially among GFIs.

But in crafting the proposed record P5-trillion 2022 national budget, the DBM said “measures to enhance corporate revenue generation and improve operational efficiency, including privatization of certain GOCC operations and assets, should be undertaken” by state corporations.

“GOCCs/GFIs are encouraged to supplement available resources through other means, such as external financing, BOT (build-operate-transfer) schemes and variant arrangements, sale/lease of assets, etc., before requesting budgetary support from the national government,” the DBM said.

This was to ensure that GOCC and GFI budgets will only go to “strategic ongoing programs and completing projects that aim to enhance productivity and social equity in the country,” according to the DBM.

Also, the DBM said GOCCs needed to “maximize their budget and undertake innovative ways to enhance their revenue possibilities.”

In particular, the DBM urged GOCCs and GFIs to “fully recover the cost of services being rendered by them through users’ fees.”

“GOCCs/GFIs are encouraged to identify/implement programs/projects with potential to generate revenues. In cases where revenues are already being generated for services rendered, measures such as the improvement of the quality of service delivery and reduction in the cost of production should be adopted to further increase revenues,” the DBM added.

In previous years’ corporate budget calls, the DBM was not as explicit in urging GOCCs and GFIs to lessen dependence on financial support from the national government and rely more on their own earnings.

“In general, GOCCs/GFIs are primarily created to be financially viable while performing their respective mandates provided by law. Hence, it is important for GOCCs/GFIs to be financially sustainable in order for the national government to re-channel its limited resources from budgetary support to GOCCs/GFIs to other equally important requirements, especially in view of the ongoing pandemic,” Budget Assistant Secretary Rolando Toledo said in a text message last week. INQ