GOCCs’ deactivation eyed

FOLLOWING its zero-based budgeting approach in next year’s proposed budget, the Aquino administration is considering the “possible deactivation” of nonperforming government-owned and -controlled corporations (GOCCs) and irrelevant task forces under the Office of the President (OP).

Budget Secretary Florencio Abad said in a briefing paper on the proposed 2011 budget that he released to the media, some government programs would have to be cut as they are not serving their purpose, while some “well-performing” programs would be “expanded.”

“We removed the subsidy programs which we [believe are] benefiting the rich rather than the poor, or were badly targeted. We are phasing down programs where we think government has no business doing or is bad at doing,” Abad said.

Abad said that in the application of the zero-based budget approach, among the general policies being eyed is the “possible deactivation of some agencies and GOCCs,” such as the Quedan and Rural Credit Corp. and the Philippine Crop Insurance Corp., both under the Department of Agriculture (DA).

He said task forces and locally funded projects under the OP “which have finished their mandates” would be deactivated, as well.

Abad cited programs “which needed to be cut or terminated because they were no longer delivering the outcomes intended,” such as the Food-for-School program, Agricultural Input Subsidies and the Kalayaan Barangay program.

He said there is also a “need for funding for selected programs pending resolution/removal of bottlenecks in
project identification and procurement, such as DepEd [Department of Education] Critical Inputs and Tesda [Technical Education Skills and Development Authority] scholarships.”

Some programs, however, were expanded as they were found to be “well-performing or which have no adverse findings or which could be expanded to mitigate critical gaps fast and give time for a department to fix its systems and processes.”

Programs to be expanded in 2011 are the conditional cash transfer (CCT), the Government Assistance to Students and Teachers in Private Education, Education Service Contracting-Education Voucher System and the National Health Insurance Program.

Abad said in a news briefing on Monday that the allocation for the CCT would be increased from P10 billion this year to P21 billion in 2011, to cover 2.3-million households; while the coverage of public health care will be expanded to include the informal sector next year.

“Next year, for the very first time, the government is going to begin to cover the informal sector, which is a notch above the indigent sector and we’re targeting to cover about 25 percent of that 4.9-million sector,” Abad said.

In the proposed 2011 budget, “the support for corporations will decline significantly by about half with the rethinking of [national government] support to the programs of problematic GOCCs like NFA [National Food Authority], LRTA [Light Rail Transit Authority], MRTC [Metro Rail Transit Corp.] and other GOCCs.”

He said there is a “need to pursue difficult GOCC reforms,” since they “have become substantial financial burdens.”

Abad said the proposed 2011 budget would also rationalize the use of lump-sum funds “according to master plans and government priority needs such as PDAF [Priority Development Assistance Fund], farm-to-market roads, irrigation lump sums.”

The budget chief also said that in crafting the proposed P1.645-trillion budget for 2011, the Aquino administration aimed for “greater transparency and accountability,” which is why it is “gradually transferring back some of the Special Purpose Funds to departments and deactivating the others.”

“Hence, for 2011, you will no longer see the AFP Modernization Fund [P5 billion in 2010], the National Unification Fund [P100 million], and the Premium Subsidy to Indigents [P5 billion in 2010] among the list of Special Purpose Funds, as these have been integrated into the DND [Department of National Defense], the Opapp [Office of the Presidential Adviser on the Peace Process] and the DOH,” he said.

Abad said the government believes a “small-budget program”—P1.645 trillion over the earlier proposed P1.757 trillion for 2011—“is possible without too much loss or impact,” given its zero-based approach to budgeting and “the identification of inefficiencies, leakages, design and implementation reforms in some programs.”

The proposed P1.645-trillion budget is 6.7 percent more than this year’s budget.

He also said the “significant decrease in the budget deficit”—from a projected P325-billion deficit in 2010 to P290 billion in 2011—“will send the right message to the private sector and foreign investors that we mean business in getting our fiscal house in order.”

Abad said next year’s target deficit will be funded through a mix of foreign and domestic borrowings, but leaning heavily toward the latter with an assumed financing ratio of 31:69.

He said with this assumption, “we can lower our national debt to 55.3 percent of GDP, lower than the 57.3-percent debt ratio at the end of 2009 and closer to the comparable debt level of 42 percent in peer countries.” –Mia M. Gonzalez / Reporter, Businessmirror