Government hopes to trim NFA deficit to P35.8B this year
Iris C. Gonzales
Philippine Star
The government hopes to trim the deficit of the National Food Authority (NFA) to P35.8 billion this year from an expected deficit of P43.1 billion, Finance Undersecretary Jeremias Paul Jr.
Paul said the deficit is expected to narrow now that the agency has started to sell rice at P33.50 per kilo.
Previously, the government has been selling rice only at P18.75 per kilo but this has taken its toll on NFA’s finances.
As such, the NFA has started to sell rice at P18.75 per kilo, P25 per kilo and P33.50 per kilo for three different varieties.
Paul said the agency is eyeing to borrow P8 billion in the latter part of the year year to help plug the deficit. However, Paul said the NFA is still finalizing the borrowing plan.
The agency has already sold P8 billion worth of bonds in February.
The government has been looking for ways to lessen the financial problems of NFA, which has been incurring losses due to its mandate to sell rice at cheaper prices.
It has given the agency a tax subsidy of P6.9 billion from January to April for its operational needs.
The subsidy was to enable the NFA to continue with its operations and fulfill its mandate of selling rice at a cheaper price than the prevailing market rates.
However, the latest subsidy figure is just P600 million lower than the programmed tax subsidy for the whole year of P7.5 billion.
The subsidy helps the grains agency to have more funds for its import requirements.
Providing tax subsidy to the NFA is the more favored mitigating measure instead of reducing the tariffs on rice.
The government is looking at various ways to address a rice crisis in the country triggered by skyrocketing prices in the world market.
NFA incurred losses of P1.27 billion last year. In 2006, it incurred losses of P10 billion.
Authorities conceded that the rice crisis is a serious problem which the government needs to address.
As such, officials are now looking for ways to restructure the NFA and prevent it from further incurring losses.
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