Angara backs plan to cut subsidies to NFA

Sen. Edgardo Angara has expressed support to the government’s plan of cutting the subsidies given to the National Food Authority (NFA), the state grains agency.

Angara, chairman of the Senate committee on banks, financial institutions and currencies, said production subsidy is ineffective as a form of government support.

“They give NFA the subsidy and NFA sells rice at a loss,” Angara said.

The lawmaker believes the government’s conditional cash transfer program, which is implemented by the Department of Social Welfare and Development (DSWD), is more effective in helping Filipinos cope with the difficult economic tide.

“According to a study made by the Cabinet, the cash transfer program is more effective especially if they could come up with a list of beneficiaries,” Angara told reporters.

Earlier, Socioeconomic Planning Secretary Ralph Recto said the government should go slow in giving huge subsidies to NFA. He said it would be more beneficial to increase the subsidies given to other sectors such as the unemployed, the senior citizens and the educational sector.

Nevertheless, the interagency Fiscal Incentives Review Board (FIRB) had approved an increase in the Tax Expenditure Fund (TEF) of the NFA.

The TEF is a subsidy released by the Department of Budget and Management (DBM) to government-owned and controlled-corporations and state-run companies mainly to settle customs duties and other taxes arising from the importation of goods.

The government has programmed a TEF for the grains agency of only P7.5 billion for 2008 but NFA expects its TEF needs to increase to as much as P32 billion or more than four times the programmed amount.

The subsidy enables NFA to continue with its operations and fulfill its mandate of selling rice at a cheaper price than the prevailing market rates. It also helps the grains agency to have more funds for its import requirements.

Fiscal authorities said the government is studying how much increase in subsidies it would allocate for the expansion of the conditional cash transfer programs.

For next year, the government is allocating a budget of P10.5 billion for the DSWD out of the proposed P1.415 trillion-budget for 2009. This is a funding increase of 117 percent from this year’s budget of P4.8 billion.