Philippines failed to scrap loss-making firms-ADB
The Asian Development Bank said Saturday the Philippines has failed
to follow a commitment to reduce the number of state-run corporations
that have been bleeding government coffers dry.
It said Manila sought ADB technical assistance in 2006 to improve the
efficiency of the government-owned or government-controlled corporations
that perform socially-oriented services such as maintaining food supply
stability or provide basic services in areas including transport,
housing and utilities.
State enterprises have been “problematic” with “weak institutional
and regulatory frameworks” and “most” have been bleeding red ink, the
Manila-based ADB said.
State subsidies or credit guarantees cost taxpayers 80.4 billion
pesos (1.69 billion dollars) in the five years to 2004, leading to
national budget deficits and accounting for a full third of the
country’s total public debt, it added.
Last year consulting firms hired by the ADB recommended that
President Gloria Arroyo’s government merge state firms working in the
same sector, such as the Light Rail Transit Authority that runs Manila’s
overhead rail system and the older Philippine National Railways that
services nearby provinces, it said.
The government was also advised to effect the “gradual closure or
privatisation” of the state investment firms National Development Co.
and Home Insurance Guaranty Corp.
However, “the momentum in implementing the (technical assistance)
recommendations waned” after the 740,000-dollar study was completed, and
all four entities still exist, said the lender.
The bank acknowledged these measures “are difficult and costly to
implement” though they had a “potentially high return.”
In the meantime it urged Manila to improve corporate governance for
these firms, impose “hard budget constraints” on them and clean up their
project portfolios.
-AFP
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