Subsidies hit P56.17B in first seven months

National government subsidies shrank in July to about a third of last year’s level, documents from the Bureau of the Treasury released this week showed.

Subsidies for the seven-month period starting January still remained above the government’s full-year target and were near the total for the whole of last year, data showed. This came on the back of the six-fold increase in June due to a jump in health benefit payouts.

For the month of July, subsidies totaled P6.62 billion or about a third of the P18.75 billion in government subsidies in July of 2013.

Government subsidies are born out of the need to support entities that cannot fund themselves. These include Philippine Health Insurance Corp., National Housing Authority, National Electrification Administration and Philippine Postal Corp., among others.

Subsidies for the January-to-July period reached P56.17 billion, nearly double the P31.97 billion recorded in the same seven months of 2013.

For all of last year, subsidies totaled P66.33 billion.

The Treasury said the bulk of the subsidies last July or about P5.69 billion went to nonfinancial government corporations, while the rest went to other smaller agencies. There were no subsidies to state-owned financial firms for the month.

The rise in subsidies for the seven-month period came as a result of a 563-percent increase in June, driven mainly by payouts made by Philhealth. About P35 billion in subsidies went to Philhealth in June alone.

July’s dip in subsidies mirrors the overall trend of slower spending for the month of July, when the government nearly balanced its budget.

Tax and customs revenues in July climbed 15 percent and this was accompanied by an opposite 15-percent decline in disbursements. As a result, the country’s budget deficit shrank to P1.8 billion in July, down 97 percent year-on-year, which has raised fears over the government’s ability to sustain its fiscal stimulus for the economy.