Government sets record subsidies next year

State subsidies to government owned- and controlled-corporations (GOCCs) as well as financial institutions (GFIs) will increase by a fifth next year owing to cash dole-outs and the jeepney modernization program, data from the Department of Budget and Management (DBM) showed.

Based on the 2018 Budget of Expenditures and Sources of Financing (BESP) data, the national government has earmarked a record 1162.55 billion in financial aid for GOCCs and GFIs, up by 20 percent compared with the projected

1135.51 billion disbursements this year. The increase is attributed to the government’s non-recurring expenses on the conditional cash-transfer (CCT) program being facilitated by the Land Bank of the Philippines, which aims to support Filipino households that will be affected by the proposed tax reform package.

Aside from the CCT, the government has also tapped the Development Bank of the Philippines (DBP) to help in funding the planned public utility vehicle (PUV) modernization.

The Land Bank and DBP are traditionally non-recipient of monetary aid from the national government as these two state-owned lenders are members of the so-called “Billionaires’ Club,” an elite class of GOCCs that declare 11 billion or more in dividends annually.

Finance Secretary Carlos G. Dominguez III said the two state-owned lenders now require financial support from the national government to implement the CCT and PUV modernization programs.

“Both banks need to meet a certain level amount of CAR (capital adequacy ratio) right, so we want to make sure that these banks are strong enough to do that,” Dominguez told reporters. The budget department is allocating

125.62 billion in subsidies for Land Bank next year and another 11.13 billion for the DBP.

“The 125 billion [for Land Bank] is really for the complimentary programs because of the TRAIN (Tax Reform for Acceleration and Inclusion),” National Treasurer Rosalia B. de Leon told reporters, referring to the Duterte administration’s first tax reform package.

“So, we have about 124.5 billion that would be for the implementation of Land Bank for the CCT program, and then the additional 11.1 billion [of the DBP is] for the PUV program,” the Treasury chief added.

Meanwhile, the DBM is setting aside 157.13 billion for the Philippine Health Insurance Corp., commonly known as Philhealth, an increase of 7.3 percent compared with the estimated

153.22 billion in estimates in 2017.