4 govt firms, Arroyo-era programs to be scuttled

PRESIDENT Benigno Aquino III plans to abolish at least two government-owned or -controlled corporations to slash next year’s budget by more than P100 billion.

Budget Secretary Florencio Abad said the Agriculture Department’s guarantee arm, Quedan and Rural Credit Guarantee Corp. or Quedancor, and the Philippine Crop Insurance Corp., which provides insurance coverage to farmers, would most likely be dissolved.

He said the fate of the two companies was discussed after the President approved a budget proposal of P1.645 trillion for next year—P112 billion less than the original spending plan submitted by his economic team.

Abad said a number of task forces under the Office of the President, such as the Presidential Anti-Smuggling Group and the presidential anti-graft commission, would also be scrubbed.

Programs of the past administration that were “no longer delivering the outcomes intended” would also be terminated. These include the input subsidies of the Agriculture Department, the Kalayaan Barangay Program that finances development projects in rebel-infested areas, and the Kilos Asenso Program that was designed to provide a 50-percent counterpart funding to local government units that will build roads, bridges and public hospitals. President Aquino on Monday also approved six measures to further bring down government expenditures next year.

These include a freeze on hiring for new positions except for teachers, uniformed personnel and medical personnel; keeping 2010 levels for contractual and casual employees; smaller benefits for government workers; limiting expenses for utilities, communications, and supplies; and a moratorium on the construction of new government offices and motor vehicle acquisitions

Abad said the Palace could only appeal to government-owned corporations not to buy new vehicles since their budgets do not go through the Office of the President.

“The President has always said we have to be frugal, so we will appeal to them to heed the spirit of this call,” he said.

The new budget proposal will yield a deficit of P290 billion or 3.2 percent of the country’s gross domestic product. Quedancor owes P11.4 billion to various banks, including P5 billion to the former Equitable PCI Bank and Land Bank of the Philippines through a syndicated loan, and P1.5 billion in bonds.

In 2008 the House investigated the company after the Audit Commission found anomalies in a multi-billion-peso swine dispersal program. It also rejected a proposal to bail out the company, and it is now unclear how its dissolution would affect its debts.

On Tuesday, the Senate said it would file a resolution to compel government-owned and -controlled corporations to declare dividends that would go to the general fund. The recommendation was made during a Senate finance committee 2010 budget briefing.

“What is happening now is, these funds are placed in different pockets of public corporations and they are beyond the scrutiny of Congress,’’ Senate President Juan Ponce Enrile told the first hearing of the finance committee.

“So you have the abuse that is happening where executives of government corporations can have as much as they want in bonuses, representation expenses, and even salaries.

“All these funds should be put back to the general fund. And if they [the companies] need funds for their operational requirements, for development and support, they must go to the budget office and Congress to justify their requests.”

Senator Franklin Drilon, finance committee chairman, said the Metropolitan Waterworks and Sewerage System and the Road Board had abused their fiscal autonomy by awarding generous benefits and privileges to their own officials and employees.

He stressed the need for a law that would require all government-owned and -controlled corporations to declare their revenue and the government’s share in it. –Joyce Pañares, Fel V. Maragay and Christian Cardiente with Othel Campos, Manila Standard Today