Gov’t subsidies to state firms fell in first 2 months

Government subsidies to state-controlled corporations fell by more than half in the first two months of the year due to the improvement in governance of public firms.

Data from the Department of Finance (DOF) showed that subsidies in January and February dipped to P858 million—a 59.3-percent decline year-on-year.

The biggest recipient of government financial aid was the Philippine Postal Corp., which got P667 million during the period.

Other major beneficiaries were the Philippine Children’s Medical Center (PCMC) with P43 million, the Center for International Trade Expositions and Missions (CITEM) with P48 million, and National Kidney and Transplant Institute (NKTI) with P29 million.

Many state firms are still partly dependent on state subsidies, particularly those with developmental and social protection mandates. One such institution is the National Food Authority. Its function is to buy rice at high prices to support farmers, and sell the stock at low prices to consumers—a mandate that makes losses inevitable.

But according to the DOF, there is a standing directive for government-owned and -controlled corporations (GOCCs) to improve their capacity to generate income, and several institutions have done just that.

The drop in subsidies to state firms also comes amid controversies regarding the role of some public corporations that figured in the “pork barrel” scam, which involved several lawmakers including three senators.

Late last year, President Aquino approved the abolition of 11 “underperforming” GOCCs. These were the National Agribusiness Corp. (Nabcor), Zamboanga del Norte Rubber Estate Corp. (Zrec), Human Settlements Development. Corp. (HSDC), Philippine Forest Corp. (PFC), Cottage Industry Technology Center (CITC), Southern Philippines Development Authority (SPDA), Philippine Fruits and Vegetables Corporation (PFVC), San Carlos Fruits Corp. (SCFC), Philippine Agricultural Development and Commercial Corp. (PADCC), Bataan Technology Park Inc. (BTPI), and PNOC Shipping and Transport Corp. (PNOC-STC).

NABCOR and ZREC, along with the Philippine Forest Corp. were the institutions linked to the pork barrel scam.