Analysts see govt shift to targeted, impact-oriented approach
Subsidies extended by the national government to state-run firms fell by more than a fifth in the first four months of 2025 in what analysts said could point to a government shift toward a targeted, impact-oriented subsidy use.
The latest data from the Bureau of the Treasury (BTr) showed that from January to April, subsidies to GOCCs totaled P37.13 billion, a 21.5 percent decline from P47.31 billion during the same period in 2024.
In April alone, the government disbursed P14.54 billion in subsidies, down sharply by 47.5 percent from P27.72 billion a year earlier.
Top subsidy recipients
Among the top recipients during the four-month period were: National Irrigation Administration (NIA) with P11.8 billion, Power Sector Assets and Liabilities Management Corp. (PSALM) P8 billion, National Food Authority (NFA) P3 billion, Philippine Crop Insurance Corp. P2.25 billion, and Bases Conversion and Development Authority (BCDA) P1.94 billion.
For April, PSALM received the largest allocation with P8 billion, followed by NIA at P3.76 billion.
A report published by the Congressional Policy and Budget Research Department of the House of Representatives in 2019 explained that the national government regularly supports GOCCs in various ways that include subsidy, equity and net lending.
The subsidy granted to GOCCs covers operational expenses not supported by revenues, as well as payments for deficits and losses, the report said.
GOCCs are also mandated under Republic Act 7656 or the Dividend Law, to remit at least 50 percent of their net earnings during the preceding year as dividends to the national government.
‘Targeted approach’
John Paolo Rivera, senior research fellow at the òòò½´«Ã½, said the decline likely reflects either improved performance by some GOCCs, or a more targeted government approach to granting support to such companies.
“The significant decline suggests the government is tightening support amid
budget constraints or that some GOCCs have improved their financial performance, reducing the need for subsidies,” he said.
“This may also be part of a broader rationalization of transfers, possibly to prioritize infrastructure execution over routine operational subsidies,” Rivera noted.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the trend could also be tied to the administration’s drive to increase dividend remittances from profitable GOCCs.
“The decline in subsidies could, ironically, be linked to efforts to boost dividend collections from profitable GOCCs, helping reduce the need for new debt,” Ricafort explained.
He added that continued support for PSALM and NIA underscores the government’s focus on energy liabilities and agricultural productivity.
“The allocation trend highlights the administration’s efforts to improve productivity in key sectors like agriculture and energy.”
Rivera shares this view, noting that support for irrigation and food security remains vital.
“These trends point to a shift toward strategic, impact-oriented subsidy use – concentrating spending in sectors that underpin long-term economic resilience,” he said.
This paper asked the BTr as well as the Department of Budget and Management regarding the decline in national government subsidies to GOCCs, but their respective officials have yet to respond as of press time.
