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NEWS UPDATES 28July 2010

Philippines may chop government companies

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The government is looking at abolishing government-owned and controlled corporations (GOCCs) and Government Financial Institutions (GFIs) that are not only obsolete but are also incurring ballooning liabilities, the Manila Times reports. Finance Secretary Cesar Purisima on Tuesday said that GOCCs, if not managed well, pose a threat to the country’s fiscal position.

“It is important that they are proactively managed as well,” Purisima added.

He said that under the administration of President Benigno Aquino 3rd, the Department of Finance would push for stronger oversight functions over GOCCs and GFIs.

Special attention, Purisima added, would be given to those that posted swelling liabilities in the past years such as the National Food Authority (NFA), Light Rail Transit Authority and National Irrigation Administration.

“We asked the Commission on Audit to set the right cut-off as to when the Aquino administration [would start] taking over these GOCCs and GFIs,” he said.

The Finance secretary added that NFA, among others, had become heavily indebted by P171 billion as of May this year.

“Thus, we are in talks with NFA and DA [Department of Agriculture] officials to limit its [NFA’s] powers to regulatory and warehousing and would instead course through its subsidy functions to the Department of Social Welfare and Development [DSWD],” Purisima said.

He added that once the government was done with the assessment of the performance of each problematic GOCC and GFI, it would recommend either abolition or privatization of NFA.

“So far, we cannot do that yet since we have to observe the transition period, which would be in the next six months. Hence, all [other GOCCs and GFIs would not be touched] except NFA,” Purisima said.

He added that if the NFA and Agriculture officials would come to agree to removing the NFA’s subsidy functions, the officials need not seek legislative enactment to seal that agreement because such functions would only be budgetary in nature.

“We can withhold [NFA’s] subsidy fund and course it through the DSWD and convert it to conditional cash transfer, which is more effective in delivering this relief to disadvantaged Filipinos than subsidizing the price of rice for everyone,” Purisima said.

The embattled NFA’s administrator, Angelito Banayo, also on Tuesday announced that he would create an audit team to investigate the agency’s operations, particularly those involving rice importations.

The announcement came a day after President Aquino in his first State of the Nation Address (SONA) exposed the previous administration’s allegedly bloated importations.

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