Make GOCCs more accountable

"Make GOCCs more accountable" - Angara

Senator Edgardo Angara today warned against underperforming and loan-ridden government owned and controlled corporations (GOCCs), asserting that if not speedily addressed, their debts and deficits could place the country in an extremely negative financial position.

Citing the National Food Authority (NFA) as an example, Senator Angara pointed out that the agency is "following the footsteps of NAPOCOR as the next financial fiasco to hit the government."

"In a 2007 review[1] of NFA's operations, its projected accumulated losses in 2007 amounted to Php48 billion while its outstanding loans is around Php69 billion," said Senator Angara.

"If NFA continues to operate as is, it is projected that in the year 2010 its accumulated losses will hit P111 billion and its outstanding loans will reach P136 billion," he said.

According to Senator Angara, "the losses may be partially due to imprudence in debt risk management by the GOCCs, as their debts are automatically backed by government guarantee."

"As of the first quarter of 2007, government is backing Php418.364 billion worth of GOCC debt. This could be a huge financial burden for the government if these corporations don't straighten up their act," said Senator Angara.

As such, Senator Angara asserts that "Debts acquired by GOCCs should no longer be automatically backed by government guarantee, as this allows GOCCS to be careless of their own debt."

"GOCCs should not just be more responsible in their debts, but they should be accountable to the government as well. Considering the volume and capacity of public resources and activities undertaken by government corporations, it is imperative that a formal mechanism be institutionalized in the review and analysis of the budgets of these GOCCs," said Senator Angara.

"This is to ensure that they are consistent with the national development plan and also to assure transparency in the operations of said corporations," he said.

In this light, Senator Angara has filed a bill amending Section 13 of Presidential Decree No. 1177, otherwise known as the "Budget Reform Decree of 1977." In addition to the annual budget of the national government which the President is required to submit to Congress (the basis for the enactment of a General Appropriations Act), it shall also include in its budget submission the proposed corporate operating budgets of government-owned or controlled corporations, their subsidiaries and affiliated companies, which require national government budgetary support.

This bill also requires these GOCC's to submit to Congress separate and yearly financial performance reports vis-a-vis their approved budgets, as well as status reports on obligations they have entered into which are backed by government guarantees.